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Gasworks, Incorporated, has been approached to sell up to 3 million gallons of gasoline in three months at a price of $ 2 . 8

Gasworks, Incorporated, has been approached to sell up to 3 million gallons of gasoline in three months at a price of $2.85 per gallon. Gasoline is currently selling on the wholesale market at $2.50 per gallon and has a standard deviation of 64 percent. If the risk-free rate is 6 percent per year, what is the value of this option? Use the two-state model to value the real option. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g.,1,234,567.89.)

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