Gasworks, Inc., has been approached to sell up to 2.8 million gallons of gasoline in three months at a price of $2.70 per gallon. Gasoline is currently selling on the wholesale market at $2.40 per gallon and has a standard deviation of 62 percent.

If the risk-free rate is 7 percent per year, what is the value of this option? Use the two-state model to value the real option.