The NPV approach must be:
A)augmented by added analysis if there are a few embedded options.
B)augmented by added analysis if a decision has signiﬁcant embedded options.
C)jettisoned if there are any embedded options.
D)computed carefully to identify the options.
E)None of the above.

Question

Quizplus · Accepted Answer

If a decision has significant embedded options, the NPV approach needs to be augmented by added analysis. This is because ignoring the value of embedded options can lead to an inaccurate NPV calculation. However, if there are only a few embedded options that have minimal impact on the overall decision, then the NPV approach can still be used without added analysis. Options should be identified and evaluated in order to make informed decisions.

The NPV Approach Must Be