Hoya Industries is considering a project with an initial cost today of $10,000. The project has a life of 3 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 10 percent, and the cash inflows will increase to $7,000 a year for three years. What is the value of the option to wait at a discount rate of 11 percent?

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Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.