To see if valuing an investment as a real option creates any extra value for the firm,it is necessary to establish a benchmark.

Question

Quizplus · Accepted Answer

To determine the value added by using real options analysis, it is important to compare it to a baseline or benchmark valuation methodology. This helps to isolate the impact of real options and assess whether they create additional value for the firm.

To See If Valuing an Investment as a Real Option