Douglass Engineering is considering a project that has an initial cost today of $22,000. The project has

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Douglass Engineering is considering a project that has an initial cost today of $22,000. The project has a two-year life with cash inflows of $13,500 a year. Should the firm decide to wait one year to commence this project, the initial cost will increase by 4 percent and the cash inflows will increase to $14,200 a year. What is the value of the option to wait if the applicable discount rate is 12 percent?

a. $123.33

b. $81.05

c. $141.41

d. $183.17

Posted Date: Nov 04, 2021 03:18 PM

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Douglass Engineering is considering a project that has an initial cost today of $22,000. The project has

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