The option to wait:
A)increases in value as the project's sensitivity to new technology increases.
B)is independent of the project's discount rate.
C)is valueless when a project is profitable given immediate implementation.
D)decreases the net present value of a project.
E)may have value even if a new project currently has a negative net present value.

Question

Quizplus · Accepted Answer

Waiting may still have value for a project with a negative net present value if there is a chance that the project will become profitable in the future. The option to wait allows for flexibility in timing and allows the company to reassess the project's profitability before committing resources. Therefore, option E is the best choice.

The Option to Wait