Industrialization Enterprise is considering a three-year project that will require an initial investment of $43,500. If market demand is strong, Industrialization Enterprise thinks that the project will generate cash flows of $29,500 per year. However, if market demand is weak, the company believes that the project will generate cash flows of only $1,500 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 11%, what will be the expected net present value (NPV) of this project if the company is ignoring the timing option?

-$6,746

-$5,903

-$6,184

-$5,622

hat will be the expected NPV if Industrialization Enterprise delays starting the project? (Note: Use the cost of capital to discount all cash flows.)

$8,784

$3,162

$2,688

$28,590

What is the value of Industrialization Enterprises option to delay the start of the project?

$2,688

$3,162

$6,324

$28,590

$8,784