Wildcat Drilling is an oil and gas exploration company that is currently operating two active oil fields with a market value of? $200 million each. ? Unfortunately, Wildcat Drilling has? $500 million in debt coming due at the end of the year. A large oil company has offered Wildcat drilling a highly? speculative, but potentially very? valuable, oil and gas lease in exchange for one of their active oil fields. If Wildcat accepts the? trade, there is a? 10% chance that Wildcat will discover a major new oil field that would be worth? $1.2 billion, a? 15% that Wildcat will discover a productive oil field that would be worth? $600 million, and a?75% chance that Wildcat will not discover oil at all.

What is the overall expected payoff to Wildcat from the speculative oil lease? deal?

a. $275 million

b. ?$360 million

c. ?$160 million

d. ?$85 million