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(Solved): An analyst is evaluating a project that has been assigned a discount rate of 12 percent. If the firm ...



An analyst is evaluating a project that has been assigned a discount rate of 12 percent. If the firm starts the project today, it will incur an initial cost of $280 and will receive cash inflows of $350 per year for three years. If the firm waits one year to start the project, the initial cost will rise to $420 and the cash flows will increase to $385 per year for three years. What is the value of the option to wait?



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