What is the value of the option to wait

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Hickock Ming is evaluated when to open a gold mine The has 45 900 ounces of gold left that can be mined and mining operations will produce 5 103 ounces per year The required return on the gold mine is 11 percent and it will cost $33 1 million to open the mine When the mine is opened, the company will sign a contract that will guarantee the price of gold for the remaining Me of the mine If the mine is opened today, each ounce of gold will generate an after-tax cash flow of $1.310 per ounce If the company waits one year, there is a 65 percent probability that the contract price will generate an after-tax cash flow of $1, 510 per ounce and a 30 percent probability that the after-tax cash flow will be $1210 per ounce.

1. What is the value of the option to wait? (Enter your answer in dollars, not millions of dollars. #.g.. 1, 234, 567 Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.)

Reference no: EM131511661

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