Some capital budgeting projects contain real options in that they provide opportunities to obtain or eliminate specified real assets such as machinery or a manufacturing plant.

Question

Quizplus · Accepted Answer

Real options refer to the flexibility to obtain or divest real assets such as machinery, plants or properties. Therefore, some capital budgeting projects may include real options that provide opportunities to acquire or dispose of specific assets.

Some Capital Budgeting Projects Contain Real Options in That They