An Oil Company Is Considering Drilling in the Gulf at a Current

An oil company is considering drilling in the Gulf at a current cost of $300,000 with an expected profit of $500,000 in three years. The current market rateof interest is 10 percent. Should the company make the investment?

A) Yes, the future value of the profit is greater than the present value of the cost.
B) No, the future value of the profit is less than the present value of the cost.
C) Yes, the present value of the profit is greater than the present value of the cost.
D) No, the present value of the profit is less than the present value of the cost.