A negative net present value project that may ultimately lead to a highly positive net present value project is called a(n) ____ option.
A) shutdown
B) expansion
C) growth
D) designed-in

Question

Quizplus · Accepted Answer

A negative net present value project that may ultimately lead to a highly positive net present value project is called a growth option. This is because even though the initial investment is negative, the potential for future growth and profitability justifies the initial expense. This type of option is often seen in industries such as technology and biotechnology, where research and development costs are high but have the potential for significant returns in the future. Therefore, option C is the best choice.

A Negative Net Present Value Project That May Ultimately Lead