Multiple Choice
You are considering a project which has been assigned a discount rate of 8%. If you start the project today,you will incur an initial cost of $480 and will receive cash inflows of $350 a year for three years. If you wait one year to start the project,the initial cost will rise to $520 and the cash flows will increase to $385 a year for three years. What is the value of the option to wait?
A) $15.23
B) $17.08
C) $18.67
D) $20.20
E) $50.20
Correct Answer:
Verified
Correct Answer:
Verified
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