Choose either Question 13 or Question 14 to answer (20 points). If you do both, 10 points extra will be assigned to the second question. 13. The Option to Delay Your company is deciding whether to invest in a new machine. The new machine will increase CF by $7 million per year. You believe the technology used in the machine has 10 year life (so, no matter when you purchase it - it will be obsolete in 10 years from today, not the day your investment starts). The machine is currently priced at $26 million. The price of the machine will decline by S5 million per year until it reaches $11 million, where it will remain. Your required return is 10%. When is the best time to purchase the machine? You can use the following table to construct project NPVs at different time period. (20 points) YearCost YearsLeft Benefits in PV NPVtNPVo $ 26 What is the value of the real option to delay for 3 years