Blunder Petroleum Corp (BP is considering whether it should drill for oil in the Gulf Mexico. Based on prior experience it has estimated the following. The initial cost at time t = O of the exploratory rig is $5 million. The probability of finding sufficient oil with exploratory rig is 60%. If there is no sufficient oil the project will be abandoned with zero salvage value. If sufficient amount of oil is found, then the project will move to the next stage and at time t = 1 the firm will construct the full rig at a cost of $50 million. If this investment is made, there will be three equally possible scenarios. Under Success scenario the well will have a net value of $108 million, under Normal scenario the well will have a net value of $59 million, and under Fiasco scenario the well will have a net value of $22 million. All three net values occur at time t = 2. BP's cost of capital is 10%. * Construct a decision three with cash flows and probabilities specified. * What is the expected NPV of the project? Should BP accept or reject this project?