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A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is more valuable than an inflexible one. When a project is flexible or generates new opportunities for the company, it is said to contain real options.

 

  • Why might recognizing a real option raise but not lower a project's net present value (NPV) as found in a traditional analysis?
  • Why do we tend to underestimate NPV when we ignore the option to abandon?
  • What do you suggest as a cost-effective approach to capital budgeting analysis when a project contains real options.
    • Posted: 3 years ago
    • Due: 
    • Budget: $5
    Answers 1
    • FLEXIBLE
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    • Assignment 1: Budgeting with Real Options

      A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is more …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is more …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is more …

    • A capital investment

    • Assignment 1: Budgeting with Real Options

      A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is more …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is …

    • A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is …