Value of the option to wait if the applicable discount rate

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Reference no: EM13729791

Wilson's Antiques is considering a project that has an initial cost today of $10,000. The project has a two year life with cash inflows of $6,500 a year. Should Wilson's decide to wait one year to commence this project; the initial cost will increase by 5% and the cash inflows will increase to $7,500 a year. What is the value of the option to wait if the applicable discount rate is 10%?

A. $1,006.76

B. $1,235.54

C. $1,509.28

D. $1,606.76

E. $1,735.54

Reference no: EM13729791

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