ABC firm has already conducted research and obtained a 17-year patent on a new engine. It has the following additional data:

PV of future cash flows = S = 3.5 B

PV of developing costs = X = 3.0B

Risk-free rate = 6%

Standard Deviation = 49%

Annual expected costs of delay = 6%.

Is this a good project? Should they introduce this engine immediately or should they wait? Explain why. If your answer is to wait, when should they introduce the new engine (Hint: repeat your analysis by reducing the number of years on the patent).