Texas Wildcatters Inc. (TWI) is in the business of finding and developing oil properties, then selling the successful ones to major oil companies. It is now considering a new potential field, and its geologists have developed the following data, shown in thousands of dollars. * t=oA$350 feasibility study would be conducted at t=o. The results of this study would determine if the company should commence drilling operations or make no further investment and abandon the project. There is an 80% probability that the feasibility study would indicate that an exploratory well should be drilled. There is a 20% probability that no further work would be done. * t=1 If the feasibility study indicates good potential, the firm would be required to make an after-tax investment of $1,200 at t=1 to drill an exploratory well. The best estimate is that there is a 60% probability that the exploratory well would indicate good potential and thus that further work would be done, and a 40% probability that the outlook would be poor and the project would be abandoned. * t=2 If the exploratory well tests positive, the firm would go ahead and make an after-tax investment of $8,000 to obtain an accurate estimate of the amount of oil in the field at t=2. * t=3 If the full drilling program is carried out, there is a 50% probability of finding a lot of oil and receiving a $25, ooo after-tax cash inflow at t=3, and a 50% probability of finding less oil and then receiving only an $8,000 after-tax cash inflow. * Since the project is quite risky, an 18.00% cost of capital is used. a. $1,406.39 b. $2,821.14 C. $994.32 d. $1,035.76 e. $898.97