Option to expand the branch:

The original project was: New Food Inc. plans to open a new a new restaurant in North Dakota. The initial costs of opening the business is $8.7 million. The firm estimates a 30% probability of high demand for the new food. In this case New Food Inc. will receive annual cash flows of $12.7 million for the next 2 years. The firm estimates a 48 probability of medium demand. In this case the company expects to receive annual cash flows of $7.5 for 2 years. There is also possible that the demand will be low and the annual cash flows will be only $1.5 million for 2 years.

Option to expand the project: Now the company evaluating the possibility to expand the project if the original project is successful. The company plans to invest another $8.7 million at the end of year 2 (beginning of year 3) of the project to receive the same cash flows of $12.7 million for additional 2 years (years 3 and 4) in the case of high demand or to get $7.5 million for additional 2 years (years 3 and 4) in the case of medium demand. However, if the project was not successful during the first 2 years, the company will not expand the project for additional 2 years.

The company's cost of capital is 11.25 percent.

Probability	Cash Flow Year 1 in millions	Cash Flow Year 2 in millions	Cash Flow Year 3 in millions	Cash Flow Year 4 in millions
30%	12.7	12.7	12.7	12.7
48%	7.5	7.5	7.5	7.5
Please calculate it	1.5	1.5	$0	$0

Calculate expected PV of future cash flows of the project.

Calculate the answer in millions. Round the answer to two decimals.