Question 11 1.5 pts Barrick Gold, an Australian gold mining company, is considering re-opening a gold mine at a cost of $60 million. The re-opening costs are expected to remain constant over time. If the company re-opens the mine today, it can enter into a hedging agreement and secure a net cashflow of $15 million per annum for 7 years. If the company re-opens the mine in one year from now, the company expects to secure a net cashflow of $12 million or $20 million per annum for 7 years with equal probability. Assume the net cashflow starts exactly 1 year after the mine re-opens, and the appropriate cost of capital is 10% per annum. Using the approach discussed in the lecture, the value of the option to postpone the project by one year is closest to (ignore taxes): $4.0 million $3.2 million 0 $5.7 million None of the other answers