Consider the problem of investing in a risky project. A project costs $$500.$ The annual cash flow for the first year are $$60$ and grows at the rate of $3\%$ annually. The risk free rate is $5\%.$ The company WACC is $12\%.$

Suppose the project has an option to let you wait and decide whether to accept the project. You can invest now or next year or in two years. At the end of $2$ years you either invest in the project or lose it since further deferral is not possible. The project analyst has done the calculations and has produced the binomial tree showing the cash flows from the project at future dates. Calculate the NPV of the project.

p$\_$up $0\mathrm{.}40$

$$80$

$$70$

$$60$ $$60$

$$50$

$$40$

Group of answer choices

$$666\mathrm{.}67$

$$783\mathrm{.}21$

$$166\mathrm{.}67$

$$563\mathrm{.}45$