Montana Mining Co $\begin{array}{lc}\text { Cash Outflow } & \text { Probability } \\\$ 10 \text { million } & 60 \% \\\$ 30 \text { million } & 40 \%\end{array}$

Montana Mining Co. (MMC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Montana. To obtain the rights, MMC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. MMC incurred exploration and development costs of $60 million on the project. MMC has a credit-adjusted risk free interest rate is 7%. It estimates the possible cash flows for restoring the land, three years after its extraction activities begin, as follows: $\begin{array}{lc}\text { Cash Outflow } & \text { Probability } \\\$ 10 \text { million } & 60 \% \\\$ 30 \text { million } & 40 \%\end{array}$
- The asset retirement obligation (rounded) that should be recognized by MMC at the beginning of the extraction activities is:

A) $8.2 million.
B) $14.7 million.
C) $18 million.
D) $30 million.