Investment Timing Option: Decision-Tree Analysis The Karns Oil Company is deciding whether to drill for oli on a tract of land that the company owns. The company estimates the profect would cost $12 milion today. Karns estimates that, once drilled, the oil will generate positive net cash. flows of $6 million a year at the end of each of the next 4 years, Although the company is fairly confident about its cash flow forecast, in 2 years it will have more information about the local geology and about the price of olf. Karns. estimates that if it waits 2 years then the project would cost $13 milion. Moreover, if it waits 2 years, then there is a 90% chance that the net cash flows would be $6.3 million a year for 4 years and a 10% chance that they would be $3.3 million a year for 4 years. Assume all cash flows are discounted at 8%. a. If the company chooses to drill today, what is the project's net present value? Do not round intermediate calculations. Enter your answer in millions. For example. an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimat places. 5 million b. Usine decision-tree analvus. does it make cance to wait 2 years before deciding whether to drill