If projects have implied options, then
A)the shorter the forecasted life of the project, the less valuable the option is.
B)the longer the forecasted life of the project, the less valuable the option is.
C)the shorter the forecasted life of the project, the more valuable the option is.
D)project life does not change the value option.

Question

Quizplus · Accepted Answer

Options embedded in projects, such as the option to expand, abandon, or delay, generally become more valuable with longer forecasted project lives. This is because there's more uncertainty and more time for circumstances to change in ways that could make exercising the option advantageous. Therefore, the shorter the forecasted life, the less opportunity there is for such changes, making the option less valuable.

If Projects Have Implied Options, Then