You Are Considering a Project That Has Been Assigned a Discount

question 5

Multiple Choice

You are considering a project that has been assigned a discount rate of 12 percent.If you start the project today,you will incur an initial cost of $280 and will receive cash inflows of $350 a year for 3 years.If you wait 1 year to start the project,the initial cost will rise to $420 and the cash flows will increase to $385 a year for 3 years.What is the value of the option to wait?

• A)-$110.01
• B)-$55.93
• C)$18.67
• D)-$20.20
• E)$20.20

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Definitions:

Gravity Device

A device used in medical settings for the administration of fluids or medications that relies on gravity to control the flow rate.

Microdrip Administration Set

A device used in intravenous therapy that delivers a precise, small volume of fluid per drop, commonly used for accurate dosing.

Df 60

A medical device or component often related to the flow rate of a fluid, possibly similar to the DF10 but with differing specifications; without more context, its exact nature is not clear.

Medicated Intermittent Infusion

A method of administering medication in intervals rather than continuously, often through intravenous means.