Old Tucson Corporation (OTC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Texas. To obtain the rights, OTC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. OTC incurred exploration and development costs of $60 million on the project. OTC has a credit-adjusted risk free interest rate is 7%. It estimates the possible cash flows for restoring the land, three years after its extraction activities begin, as follows: (PV of $1, PVA of $1) (Use appropriate factor(s) from the tables provided.)

Cash Outflow				Probability
$	10	million			60	%
$	30	million			40	%

The natural resource asset (rounded) that should be recognized by OTC at the beginning of the extraction activities is:

Multiple Choice

• $300 million.

• $274.7 million.

• $208.2 million.

• $278 million.