1. A current radio advertisement states that the average American household has an average credit card debt of $25,000. Based on an APR (Annual Percentage Rate) of 18% (common for credit cards) and a minimum monthly payment of $200.00, how many years will it take to pay off this debt if no further purchases are made? How much interest would you pay?

2. You have just taken out a $220,000 loan for your house at an APR of 7.5% and a 30-year term. Payments are to be made monthly. Two years from now, you refinance at an APR of 5.5% and a 28-year term. What are your monthly payments for the new, 5.5% loan (to the nearest penny)? (Hint: The principle for the new loan is the payoff of the original loan.)

3. Given the following Present Value Plot for Projects A and B, which are mutually exclusive projects, answer the following questions:

(i) What is the DCFROR for Project A? for Project A, Project B?

(ii) If your company has an average reinvestment opportunity rate of 30%, which project will you choose to do (Project A, Project B, or neither)? Why?

4. Production data has been fit to a Fetkovich type curve. Given the following information, answer the questions:

Date of first production plotted for the Fetkovich type curve match is 1/1/95.
Value for Di from Fetkovich type curve match is 0.35 per year.
Value for Qi from Fetkovich type curve match is 1,500 BOPD.
Cumulative production through 12/2001 is 250,000 BO.
Estimated value of "b" is 0.30 from the Fetkovich type curve.

• If the economic limit is 20 BOPD, estimate the ERR.
• When will the economic limit be reached
• What is the EUR for this well?

5. The following NPV's have been calculated to determine if a compressor installation should be accelerated from Year 3 to Year 7. The compressor cost is $1,500,000.

a. Calculate the incremental NPV's for this project using the tabled data.

b. If capital is limited and your average reinvestment opportunity rate is 15%, what is your recommendation regarding acceleration of the project?

6. The figure below is historical production data from the Kuparuk River field. The OOIP is 5,332,979 Mstb and cumulative recovery through 12/31/2004 is 1,971,200,654 stb.

A. Estimate the decline parameters, b, qi, and D.

B. If the field economic rate is 25,000 stb/day, determine

(i) the time to reach the economic limit

(ii) the ERR

(iii) the EUR

(iii) the recovery factor at the economic limit