### Computation of npv of the project option and evaluation

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Computation of NPV of the project option and evaluation

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

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