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What is the value of the option to wait if the applicable

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Reference no: EM131142037

If you commence a project today, you will have initial costs of $16,000 and annual cash inflows of $9,900 for two years. If you wait until next year to start this project, your initial costs will increase to $17,500 and the annual cash inflow for each of the two years will be $10,500. What is the value of the option to wait if the applicable discount rate is 12 percent?

a. -$512.28

b. -$485.97

c. -$397.46

d. -$245.54

Reference no: EM131142037

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