Question: Question 6 (1 point) Suppose that we are drilling an oil well. The drilling rig costs $2800 today, and in one year the well is

Question 6 (1 point) Suppose that we are drilling an oil

Question 6 (1 point) Suppose that we are drilling an oil well. The drilling rig costs $2800 today, and in one year the well is either a success or a failure. The outcomes are equally likely. The discount rate is 10%. The PV of the successful payoff at time one is $3700. The PV of the unsuccessful payoff at time one is $0. Now, we know that the rig can be sold for $2700 in a year. When we include the value of the option to abandon, the NPV of this drilling project should be (keep two decimal places): Your

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