The timing option that gives the option to wait: I. may be of minimal value if the project relates to a rapidly changing technology.
II) is partially dependent upon the discount rate applied to the project being evaluated.
III) is deﬁned as the situation where operations are shut down for a period of time.
IV) has a value equal to the net present value of the project if it is started today versus the net
Present value if it is started at some later date.

Question

Quizplus · Accepted Answer

The timing option's value is indeed influenced by rapidly changing technology (I), the discount rate (II), and the comparison of net present values between starting now and later (IV). Option III incorrectly defines a timing option, which is more about choosing when to start rather than shutting down operations.

The Timing Option That Gives the Option to Wait: I