m4a1 budgeting real options
Assignment 1: Budgeting with Real Options
A capital investment project that generates new opportunities is more valuable than one that doesn’t. A flexible project, one that does not commit management to a fixed operating strategy is more valuable than an inflexible one. When a project is flexible or generates new opportunities for the company, it is said to contain real options.
In this assignment, you are to discuss the budgeting implications of different option strategies and the cost-benefit issues associated with such decisions.
- Why might recognizing a real option raise but not lower a project’s net present value (NPV) as found in a traditional analysis?
- Why do we tend to underestimate NPV when we ignore the option to abandon?
- What do you suggest as a cost-effective approach to capital budgeting analysis when a project contains real options.
Write a one-page memo in which you explain the answers to any two of the three questions. Post your memo in the discussion forum and solicit feedback from your classmates.
Looking for solution of this Assignment?
WHY CHOOSE US?
We deliver quality original papers
|Our experts write quality original papers using academic databases.|
|We offer our clients multiple free revisions just to ensure you get what you want.|
|All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount|
|We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity|
|We will deliver your paper on time even on short notice or short deadline, overnight essay or even an urgent essay|