Determining Optimal Time for undertaking new product expansion

Question

HV Inc. is trying to determine the optimal time to undertake a product expansion. The project will require an initial investment of $15M and the firm has a WACC of 3%. Theexpansion is estimated to last 8 years, and if it is undertaken today, the annual cash flows associated with it will be $2.25M.  Due to anticipated product adoption throughout the industry, it is estimated that the annual cash inflows will increase by 2% annually. What is the optimal time to undertake the product expansion and what is its value to the firm?

Summary

The question belongs to Finance and it is about company which wants to determine the optimal time to undertake product expansion. Assuming a positive position, the optimal time as well as the value accrued to the company need to be calculated.

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