Petroleum Incorporated $($PI$)$ controls offshore oil leases. It is considering the construction of a deep$-$sea oil rig at a cost of $$516$ million. The price of oil is $$116$ per bbl$.$ and extraction costs are $$66$ per bbl$.$ Pl expects costs to remain constant. The rig will produce an estimated $1,200,000$ bbl$.$ per year forever. The risk$-$free rate is $10$ percent per year, which is also the cost of capital. $($Ignore taxes$).$ Suppose that oil prices are uncertain and are equally likely to be $$136$ per bbl$.$ or $$96$ per bbl$.$ next year. Calculate today's NPV of the project $($i$.$e$.,$ NPV @ $t=0)$ if it were postponed by one year.

Multiple Choice

$$116$ million

$$147$ million

$$202$ million

$$219$ million