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You are evaluating a project that requires an initial investment of $10,000. The annual expected cash flow of the project is $5,000 as a perpetuity.
You are evaluating a project that requires an initial investment of $10,000. The annual expected cash flow of the project is $5,000 as a perpetuity. Your colleague proposes an option of waiting for 2 years. If you wait for 2 years, the initial investment cost will increase by 10% and the annual expected cash flow of the project will increase by 5% forever. If the discount rate is 10%, what are the project NPVs in today's terms if you start the project today vs wait for 2 years?
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