Valles Global Industries has a small division that addresses the oil business. Currently, they are thinking about a pumping problem in the Durango Quadrant. They have an existing pump that will extract 50% of the known crude-oil reserve in the first year of operation and the remaining 50% in the second year. A larger pump with more power will cost $1.6 million but will take out all the known crude-oil reserve in the first year. The total revenues add up to $20 million as show below.

                           Current Pump More Power

Investment in year 0      0       $1.6 million

Revenue year 1       $10 million $20 million

Revenue year 2       $10 million    0

If their MARR is 20%, what should they do? Why?