A compressor is purchased for compressing the natural gas from 900 psi to 1800 psi for 5 years. Calculate:
a. The financial net income before income taxes if the gas price is $2.5 per MCF. Financial depreciation is based on a 5 year life straight line.
b. The financial net income after income taxes based on 40% tax rate
c. The net cash flow for this project after federal taxes.
The data you might need:
Compressor brake Horsepower (Hpb) is 200
Compressor Ideal Horsepower (HpMM) is 100 per MMCFD
Compressor Efficiency (E) is 0.85
Compressor Price is 5,000,000 $
Operating Cost is 200,000 $ per year and it is constant for all producing years Hint: for part "c" of this problem you MUST use the calculated tax in part "b" for each year.