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problem: You are thinking a project which has been assigned a discount rate of eight percent. If you start the project today, you will incur an initial cost of 480 dollar 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 dollar and the cash flows will increase to $385 a year for 3 years. Determine the value of the option to wait? 

[A] $15.23

[B] $17.08

[C] $18.67

[D] $20.20

[E] $50.20

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918677

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