A project has an expected NPV of $25 based on the traditional DCF analysis. However, using...
- A project has an expected NPV of $25 based on the traditional DCF analysis. However, using the real option valuation model, the expected NPV becomes $75. What is the option value?
____
- $25
- $50
- $75
- $100
Homework Answers
value of option = NPV of real option
it is given NPV of real option is = $75
so option value = $75 (Option C is correct answer)
(note : total project worth = 75 + 25 =$100)
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