What is the value of the option to wait

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Rosita's is considering a project that has been assigned a discount rate of 12 percent. If the firm starts the project today, it will incur an initial cost of $38,260 and will receive cash inflows of $18,320 a year for three years. If the firm waits one year to start the project, the initial cost will rise to $40,500 and the cash flows will increase to $18,640 a year for three years. What is the value of the option to wait?

Reference no: EM131060883

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