A project costs $200 and has a future cash flow of $42 per year forever. If we

Question:

A project costs $200 and has a future cash flow of $42 per year forever. If we wait one year, the project will cost $240 because of inflation, but the cash flows will be $48 per year forever. If these are the only two options, and the relevant discount rate is 12 per cent, what should we do? What is the value of the option to wait?

Fantastic news! We've Found the answer you've been seeking!