Investment Timing Option: Option Analysis The Karns Oil Company is deciding whether to drill for oil on a tract of land that the company owns. The company estimates the project would cost 58 million today. Karns estimates that, once drilied, the oil will genernte positive net cash flows of $4 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 oil. Karns estimates that if it waits 2 years then the project would cost $9 million. Moreover, if it waits 2 years, theo there is a 90% ehance that the net cash flows would be $4.2 milion a year for 4 years and a 10% chance that they would be $2.2 million a year for 4 years. Assume all cash flows are discounted at 10%. Use the Black-Scholes model to estimate the value of the option. Assume the variance of the project's rate of return is 0.632 and that the risk-free rate is 5%. Do not round intermediate calculations, Enter your answer in miltions. For example, an answer of $1.234 milition should be entered as 1.234 , not 1,234,000. Round your answer to three decimal places. 5 million