Budgeting with Real Options
AndreChausseA 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.
In this assignment, you are to discuss the budgeting implications of different option strategies and the cost-benefit issues associated with such decisions.
- 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.
Write a one-page memo in which you explain the answers to any two of the three questions.
- 7 years ago
- 20
Answer(2)
Purchase the answer to view it
- budgeting_with_real_options.docx
Purchase the answer to view it
NOT RATED
- budgeting_with_real_options_andrechausse.docx
Bids(1)
other Questions(10)
- french final exam
- Searching the Cushions for Change
- Write a paper of 500-750 words on your proposed problem description for your EBP project. The paper should address the following:
- Passive Surveillance
- JavaScript Assignment
- Finance 330 Discussion
- A+ Answers
- Based on the texts by Kafka and Eliot
- Resume
- INF 337 WK 1 DISCUSSION 1&2