What is the value of the option to wait if the applicable

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Reference no: EM132057156

Wilson's Antiques is considering a project with an initial cost today of $10,000. The project has a 2-year life with cash inflows of $6,500 a year.

Should Wilson's decide to wait one year to commence this project, the initial cost will increase by 5 percent, and the cash inflows will increase to $7,500 a year.

What is the value of the option to wait if the applicable discount rate is 10 percent?

Reference no: EM132057156

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