Which of the following statements regarding real options is NOT correct?
A) Real options should only be exercised when they increase the NPV of a project.
B) Real options enhance the forecast of a project's expected future cash flows by incorporating, at the start of the project, the effect of decisions that will be made at a later date.
C) Real options give owners the right, but not the obligation, to exercise these opportunities at a later date.
D) Real options build greater flexibility into a project and thus increase its net present value (NPV).

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements regarding real options is NOT correct?
A) Real options should only be exercised when they increase the NPV of a project.
B) Real options enhance the forecast of a project's expected future cash flows by incorporating, at the start of the project, the effect of decisions that will be made at a later date.
C) Real options give owners the right, but not the obligation, to exercise these opportunities at a later date.
D) Real options build greater flexibility into a project and thus increase its net present value (NPV).

Which of the Following Statements Regarding Real Options Is NOT