1. Johnsons Antiques is considering a project with an initial cost today of $10,000. The project has a life of 2 years with cash inflows of $7,000 per year. Should the firm decide to wait one year to commence this project, the initial cost will increase by 6 percent, and the cash inflows will increase to

$7,500 per year. Calculate the value of the option to wait at a discount rate of 10 percent, and decide whether the firm should commence the project today, commence the project next year, or reject the project.