Which of the following best describes under what circumstances a "real option" would exist?
A)Real options exist when managers have the opportunity, before a project has been implemented, to make operating changes in response to changed conditions that do not modify the project's cash flows.
B)Real options exist when managers have the opportunity, after a project has been implemented, to make operating changes in response to changed conditions that do not modify the project's cash flows.
C)Real options exist when managers have the opportunity, after a project has been implemented, to make operating changes in response to changed conditions that modify the project's cash flows.
D)Real options exist when managers have the opportunity, after a project has been implemented, to make financing changes in response to changed conditions that modify the project's cash flows.

Question

Quizplus · Accepted Answer

Real options exist when managers can make decisions after a project has started that alter its course in response to changing conditions, particularly those that affect the project's cash flows. This includes options to expand, contract, defer, or abandon projects based on new information.

Which of the Following Best Describes Under What Circumstances a "Real