Wilson's Antiques is considering a project with an initial cost todayof $20,000. The project has a 3-year life with cash inflows of $5,500 a 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 by 6 % a year. Should Wilson's decide to wait two years to commence this project, the initial cost will increase by 6 %, and the cash inflows will increase by 7 % a year. What is the value of the option to wait if the applicable discount rate is 10 percent?

Select one:

a. $1,006.76

b. $1,235.54

c. $1,509.28

d. $1,606.76

e. $1,735.54