Question: Wilson's Antiques is considering a project that has an initial cost today of $10,362. The project has a two-year life with cash inflows of $6,369

Wilson's Antiques is considering a project that has an initial cost today of $10,362. The project has a two-year life with cash inflows of $6,369 per year. Should Wilson's decide to wait one year to commence this project, the initial cost will increase by 5% and the cash inflows will increase to $7,468 per year.

What is the value of the option to wait if the applicable discount rate is 10%?

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