MAMO Company owns the rights to several oil wells. The following information is the best available for Well Number 66:
- Investment in equipment needed for extraction work: $300,000
- Working Capital Investment Required: $80,000
- Annual cash receipts (before taxes): $100,000
- Cost of restoring land at completion of work: $30,000
The oil in Well Number 66 is expected to be fully recovered five years after work starts. The equipment is expected to have no value at the end of the work, at which time the working capital is expected to be released for other uses. MAMO's required risk-adjusted after-tax rate of return is 12%.
On no more than the front of 3 pages, use this information to advise the company on whether it should start work on Well Number 66.