Project has been assigned a discount rate

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Reference no: EM131014810

A project has been assigned a discount rate of 12 percent. If the project starts immediately, it will have an initial cost of $480 and cash inflows of $350 a year for three years. If the start is delayed one year, 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. $.70

b. $1.08

c. $1.67

d. $2.20

e. $.20

Reference no: EM131014810

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