In: Finance
You are considering a project which has been assigned a discount rate of 9 percent. If you start the project today, you will incur an initial cost of $4,000 and will receive cash inflows of $2,800 a year for 2 years. If you wait one year to start the project, the initial cost will rise to $4,220 and the cash flows will increase to $3,157 a year for 2 years. What is the value of the option to wait? (Do not round intermediate calculations.)
$297.90
$2,556.92
$628.93
$408.00
$484.42