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→Calculations in the cash flow model
| '''NCF AFIT, $M''' || '''-1375.000''' || '''1359.098''' || '''578.462''' || '''314.450''' || '''168.376''' || '''87.377''' || '''44.916''' || '''19.417''' || '''4.795'''
| '''NCF AFIT, $M''' || '''-1375.000''' || '''1359.098''' || '''578.462''' || '''314.450''' || '''168.376''' || '''87.377''' || '''44.916''' || '''19.417''' || '''4.795'''
|}
|}
<sup>Source: After Thompson and Wright (1992)</sup><br>
<sup>Assumed facts:</sup><br>
:<sup>Independent Producer and Royalty Owner status, therefore eligible for percentage depletion</sup><br>
:<sup>NRI = 0.875, Wellhead tax on oil and gas revenue is 8%, annual operating cost is $24,000, incremental tax rate is 34%, oil price is $18/bbl, and gas price is $1.50/MCF</sup><br>
:<sup>Assumed Time 0 investments made on 1-1-91:</sup><br>
::<sup>Lease Bonus and G&G (depletable basis for tax calculation) = $125,000</sup><br>
::<sup>IDC's (100 % expensed for tax calculation) = $950,000</sup><br>
::<sup>Tangible expenditures (depreciable basis for tax calculation) = $300,000</sup><br>
:<sup>Estimated dry hole cost if the well is unsuccessful is $750,000 (After-tax = $750,000 x (1 - 0.34) = $495,000)
A completed cash flow time diagram is shown in [[:Image:Rose_time-value-of-money_1.jpg|Table 2]] along with the equivalent net present value calculation.
A completed cash flow time diagram is shown in [[:Image:Rose_time-value-of-money_1.jpg|Table 2]] along with the equivalent net present value calculation.