A movie will cost $35 million to produce.

Cash flow in 1 years time:

25% chance 30 million

75% chance 10 million

From Year 2 : 5 million and decline by 5% in perpetuity

cost of capital 10%

risk-free rate 6%

Given that there is an real option to delay, Delaying the production until year 1 will resolve the uncertainty about the first cash flow (30m or 10m). But the 2nd cash flow will continue to be $5 million, which will decline by 5% per year in perpetuity).

should he wait for uncertainty to be resolved or invest now? (show calculations for NPV for both situations)