The potential decision to abandon a project has option value because:
A)abandonment can occur at any future point in time.
B)a project may be worth more dead than alive.
C)management is not locked into a negative outcome.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

All of the above statements are true. Abandonment can occur at any point in the future, the project may have more value if it is discontinued, and the decision to abandon a project provides management with the flexibility to avoid a negative outcome. Therefore, the potential decision to abandon a project does have option value.

The Potential Decision to Abandon a Project Has Option Value