Question
Your company is considering a project that has the option of either to be implemented immediately or delayed two years. Year 0 1 2 3
Your company is considering a project that has the option of either to be implemented immediately or delayed two years.
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Now | -30 | 10 | 12 | 14 | 18 | 11 | 8 |
| 2 years |
|
| -32 | 16 | 20 | 22 | 10 |
If the cost of capital is 10%, you should
| Invest now | ||
| Delay because NPV is $18.54 | ||
| Invest now because NPV is $23.17 | ||
| Delay because NPV is positive |
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The Economics Of Money Banking And Finance
Authors: Peter Howells, Keith Bain
4th Edition
0273710397, 978-0273710394
