Multiple Choice
Wilson's Antiques is considering a project with an initial cost today of $10,000.The project has a life of 2 years with cash inflows of $6,500 a year.Should the firm decide to wait one year to commence this project,the initial cost will increase by 5 percent,and the cash inflows will increase to $7,500 a year.What is the value of the option to wait at a discount rate of 10 percent?
A) $1,006.76
B) $1,235.54
C) $1,509.28
D) $1,606.76
E) $1,735.54
Correct Answer:
Verified
Correct Answer:
Verified
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