TerMite Hills (TH) owns the rights to land which may or may not have copper, a mineral used in semiconductors. There are three options for TH regarding exploration for copper on the land: partner, search for copper on their own, or sell the rights to the land. It is estimated that there is a 35% chance of finding copper on the land.

TH could establish a partnership with an experienced mining company. In this case TH would receive a payment of $75,000 from the partner company and would also share in the returns if copper is found. In the case where copper is found, TH is estimated to receive $200,000 for their share of the copper in the land.

TH could explore for copper on their own. This alternative has a cost of $100,000 no matter what happens as TH must pay for the exploration. If copper is found, TH would receive the entire return estimated at $750,000.

The third option for TH is to sell the rights to the land to another party for $120,000.

Suppose that the mining company partner is willing to pay TH $100,000 (instead of $75,000) for the land initially, along with the additional $200,000 if copper is found on the land. Which of the following statements are true regarding the exploration decision at TH? (Please tell me why the answer is D)

A. It is worth up to $305,500 to obtain additional information on the presence of copper on this land.

B. The EVPI is $135,500.

C. The best decision, based on EMV, is now to "explore on your own".

D. None of the answers are correct.

E. The EMV of the "partner" decision is $160,000.