You are considering a project which has been assigned a discount rate of 7 percent. If you start the project today, you will incur an initial cost of $3,300 and will receive cash inflows of $2,100 a year for 2 years. If you wait one year to start the project, the initial cost will rise to $3,520 and the cash flows will increase to $2,457 a year for 2 years. What is the value of the option to wait?

The value of the option is $922.30

Explanation:

To find the value of the option to wait, calculate the net present value.

The net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator:

Cash flow in year 0 = $-3,520

cash flow a year for 2 years = $2,457

I = 7%

NPV = $922.30

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

bd = 9 cm

step-by-step explanation:

in a 30°-60°-90° triangle, the ratio of side lengths is 1 : √3 : 2. that is, the longest side (hypotenuse) is twice the length of the shortest side.

all of the triangles in your geometry are 30°-60°-90° triangles. ac is the hypotenuse of δacd, and the short side of δabc.

the short side ad of δacd will be half the length of ac, so 3 cm. the hypotenuse ab of δabc will be twice the length of ac, so 12 cm. segment bd is the difference of the lengths ab and ad, so is

bd = ab -ad

bd = 12 cm - 3 cm = 9 cm

comment on side length ratios

you can figure the ratios of side lengths in a 30°-60°-90° triangle by considering the trig ratios of the angles. or you can figure the length of the altitude of an equilateral triangle of side length 2 using the pythagorean theorem.

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