A R&D that requires an initial outlay of $$100,000.$ The project can either be started immediately or delayed for one year. If the project is started immediately, the expected cash inflow at the end of the first year is $$120,000.$

If the project delayed by one year, the expected cash inflow at upstate at the end of the second year is$$150,000,$ and $$120,000$ at down state. The probability at upstate is $50\%.$

Given the discount rate is $5\%.$ Should the project be delayed or started immediately?

The NPV of both options are equal

Cannot be determined

$$ Delayed

Started immediately