Which of the following methods can be used to deal formally with uncertainty in the capital-budgeting process?
A) Real options analysis.
B) Net present value (NPV) analysis.
C) Capital rationing analysis.
D) Linear programming optimization.
E) Equivalent annual annuity (EAA) analysis.

Question

Quizplus · Accepted Answer

Real options analysis is specifically designed to deal with uncertainty in the capital-budgeting process. It allows for flexibility in decision making by considering various possible future scenarios and their potential for generating positive cash flows. NPV, capital rationing analysis, linear programming optimization, and EAA are all methods that may be used in capital budgeting, but are not specifically designed to address uncertainty.

Which of the Following Methods Can Be Used to Deal