Wilson's Antiques Is Considering a Project That Has an Initial

question 27

Multiple Choice

Wilson's Antiques is considering a project that has an initial cost today of $10,000. The project has a two-year life with cash inflows of $6,500 a year. Should Wilson's decide to wait one year to commence this project, the initial cost will increase by 5 percent and the cash inflows will increase to $7,500 a year. What is the value of the option to wait if the applicable discount rate is 10 percent?

• A) $1,006.76
• B) $1,235.54
• C) $1,509.28
• D) $1,606.76
• E) $1,735.54

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Definitions:

New Words

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Procedural Memories

Memory of how to perform tasks, such as riding a bike or typing, that are done automatically without conscious thought.

Episodic Memories

Memories of specific events or experiences in one's life, including context details such as time and place.

Declarative Memories

Facts and incidents that can be intentionally remembered and brought to mind.