There is a 30 percent chance that the amount of oil in a perspective field is 7 million barrels and a 70 percent chance of 14 million barrels.If the actual amount of oil is 7 million barrels then the present value of cash flows from drilling will be $3.5 million.If the amount is 14 million, the present value will be $9.5 million.The cost to drill the well is $4.5 million.What is the expected net present value of drilling the well?

Question 38 options:

$2.0 million

$3.2 million

$7.4 million

$7.7 million