Companies often need to choose between making an investment now or waiting till the company can gather more relevant information about the potential project. This opportunity to wait before making the decision is called the investment timing option Tips Tips Consider the case: nlimited ed otions Industrialization Enterprise is considering a three-year project that will require an initial investment of $40,000. If market demand is strong, Industrialization Enterprise thinks that the project will generate cash flows of $28,000 per year. However, if market demand is weak, the company believes that the project will generate cash flows of only $1,750 per year. The company thinks that there is a 50% chance that demand will be strong and a 50% chance that demand will be weak If the company uses a project cost of capital of 14%, what will be the expected not present value (NPV) of this project if the company is ignoring the timing option? -$4,372 0-$4,918 -$5,465 -56,012 6 ety O-36,012 Industriation Enterprise as the option today starting this project for one years that analysere out whether demand will be strong or weak of the company chooses to delay the project, it will have to give up to the project will then be only a two-year project. However, the company will know for certain the market demand will be strong or worden tot If the company accepts the project now, it would mean that the company is the option to make more word die of the option is than the value of the project, then the company is more likely to use the option. The time before it to the timing option is one year. Considering these qualitative factors, the company make a quantitativement of the con what will be the expected NPV i Industrialization Enterprise delays starting the project? (Note: Um the cost of capital to discount can ow.) O $25,006 $2.679 O $5,357 What is the value of Industrialization Enterprise's option to delay the start of the project? $25,006 $2,277 O $5,357 What will be the expected NPV if Industrialization Enterprise delays starting the project? (Note: Use the O $25,006 O $8,144 O $2,679 ed O $5,357 What is the value of Industrialization Enterprise's option to delay the start of the project? O $25,006 O $2,277 O $5,357 O $8,144 $2,679