Multiple Choice
You are considering a project that has been assigned a discount rate of 12 percent.If you start the project today,you will incur an initial cost of $280 and will receive cash inflows of $350 a year for 3 years.If you wait 1 year to start the project,the initial cost will rise to $420 and the cash flows will increase to $385 a year for 3 years.What is the value of the option to wait?
A) -$110.01
B) -$55.93
C) $18.67
D) -$20.20
E) $20.20
Correct Answer:
Verified
Correct Answer:
Verified
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