If you commence a project today, you will have initial costs of $16,000 and annual cash inflows

Question:

If you commence a project today, you will have initial costs of $16,000 and annual cash inflows of $9,900 for two years. If you wait until next year to start this project, your initial costs will increase to $17,500 and the annual cash inflow for each of the two years will be $10,500. What is the value of the option to wait if the applicable is 12 percent?
a. -$512.28
b. -$485.97
c. -$397.46
d. -$245.54

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...