Quiz Ch 22 – Role of Project Cash Flows in Real Options
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What role do the cash flows from the project play in real options analysis?
What role do the cash flows from the project play in real options analysis?
True or false: Various abandonment options are assessed using the binomial method.
True or false: The Adjusted Present Value (APV) of a project is determined by adding the NPV (Net Present Value) without the abandonment option to the value of the abandonment option.
True or false: The expansion option falls under the category of financial options.
True or false: Framing the act of waiting as a distinctive form of real option.
True or false: In the event of an acquisition failure, the target firm has the option to seek compensation from the acquiring firm, serving as payment for a specific type of real call option.
True or false: The essential investment is commonly referred to as the exercise price in the realm of real options.
True or false: Adding the NPV (Net Present Value) without the expansion option to the value of the expansion option is equals to the APV (Adjusted Present Value).
True or false: Within the realm of investments, the option for a follow-on investment is akin to a put option.
True or false: Initiate real options analysis by assessing the underlying asset’s value through the discounted cash-flow (DCF) method.