Should wilson decide to wait two years to commence project

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Reference no: EM132792227

Problem 1: Wilson's Antiques is considering a project that has an initial cost today of $14,000. The project has a life of 2 years with cash inflows of $9,500 a year. Should Wilson's decide to wait 2 years to commence this project, the initial cost will increase by 3 percent and the cash inflows will increase to $11,000 a year. What is the value of the option to wait if the applicable discount rate is 12 percent?

Reference no: EM132792227

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