QUESTION 15 Trey Jackson, CFO of Jackson Exploration, Inc. is deciding how to approach a particular oil well project. If the company drills today, the project would cost $925,000 today, and would provide estimated cash flows of $600,000 per year at the end of each of the next 4 years. However, if the company waits a year before drilling, the company would have more geological information regarding the well's possibilities. The company estimates that if it waits 2 years, the project would cost $975,000 and would have a 65 percent chance of having net cash flows of $1,000,000 per year for 4 years, and a 35 percent chance of having net cash flows of only $300,000 per year for 4 years. Assume a discount rate of 17.5 percent. What should the company do? O A. Wait two years since the expected NPV (in today's dollars) of waiting is $74,430 higher than the NPV for drilling now. O B. Go ahead and drill now since the NPV of drilling today is $42,078 higher than the NPV for waiting two years. Go ahead and drill now since the NPV of drilling today is $63,298 higher than the NPV for waiting two years. OC OD. Wait two years since the expected NPV (in today's dollars) of waiting is $115,009 higher than the NPV for drilling now. O E.Go ahead and drill now since the NPV of drilling today is $11,124 higher than the NPV for waiting two years. QUESTION 15 Trey Jackson, CFO of Jackson Exploration, Inc. is deciding how to approach a particular oil well project. If the company drills today, the project would cost $925,000 today, and would provide estimated cash flows of $600,000 per year at the end of each of the next 4 years. However, if the company waits a year before drilling, the company would have more geological information regarding the well's possibilities. The company estimates that if it waits 2 years, the project would cost $975,000 and would have a 65 percent chance of having net cash flows of $1,000,000 per year for 4 years, and a 35 percent chance of having net cash flows of only $300,000 per year for 4 years. Assume a discount rate of 17.5 percent. What should the company do? O A. Wait two years since the expected NPV (in today's dollars) of waiting is $74,430 higher than the NPV for drilling now. O B. Go ahead and drill now since the NPV of drilling today is $42,078 higher than the NPV for waiting two years. Go ahead and drill now since the NPV of drilling today is $63,298 higher than the NPV for waiting two years. OC OD. Wait two years since the expected NPV (in today's dollars) of waiting is $115,009 higher than the NPV for drilling now. O E.Go ahead and drill now since the NPV of drilling today is $11,124 higher than the NPV for waiting two years