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(1)Wilson's Antiques is considering a project with an initial cost today of $10,000. The project has...

(1)Wilson's Antiques is considering a project with an initial cost today of $10,000. The project has a life of 2 years with cash inflows of $6,500 a year. Should the firm 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 at a discount rate of 10 percent? Please explain your answer.

(2)Discuss some potential shortcomings of the standard decision tree analysis.

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