Investment Timing Option: Option Analysis Kim Hoteis is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an iaitial investment of $20 milion. Kim axpects the hotel will produce positive cash fows of 53 milion a year at the end of each of the next 20 yeart. The project's cost of capital is 134 . Kim expects the cash fiows to be s3 millon s year, but it recognizes that the cash flows could actually be much higher or lowec, depending on whether the ikorean government imposes a large hotel tox. One year from now, Kim wil know whether the tax will bo imposed. There is a 50 chance that the tax will be imposed, in which case the yearly cash fows will be only 32.2 milson. At the same time, there is a sow chance that the tax wul not be imposed, in which case the yearly cash flows will be 53.0 milisn. Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tak will be imposed. If wim waits a year, the initial investment will remain at 120 milion. Assume that all cash fiows are discounted at 13%. Une the Biack-Schaies model to astimate the value of the eqtion, Assume that the variance of the project's rate of return is 0.0687 ond that the risk.free rate is 0 . Do not round intermed ate calculations. Enker your answer in milloris. For axample, an answer of 11.234 milion should be entered as 1.234, not 1,234,000 Round your ankwer to three decimal places Uhe computer sortware packages, wuch as Minitab or Evcel, to dolve this