10. Under the same assumptions as in Section 16.3, suppose your corporation owns an operating electric car dealership, together with one-year options to open five more. a. What is the value and beta of your firm if the expected first-year free cash flow for all dealerships is $600,000 ? b. What is the value and beta of your firm if the expected first-year free cash flow for all dealerships is $300,000 ? c. In which case do your options have higher beta? In which case does your firm have higher beta? Why? 16.3 The Option to Delay: Investment as a Call Option United Studios' option to produce a movie sequel illustrates how choosing the optimal time to make an investment can add value. This option to delay is common in practice. Typically, there are costs from delaying the investment decision: interim profits from the project are lost, costs might rise, competitors may enter, etc. However, by delaying, you will gain additional information regarding the value of the investment. In general, one must trade the costs from delay with the benefit from gaining information before making a decision. In this section, we see how the quantitative methods developed to price financial options can be used to analyze the optimal timing decision