9. Introduction to real options Aa Aa Consider the following statement about real options: Sormetimes real options can give managers the flexibility to decide to invest in a project or wait to make a more calculated decision. True or False: The preceding statement is correct. O True O False Which type of real option allows the output and/or inputs in the production process to be altered, depending on how market conditions change during a project's Ife? O Flexibility option O Abandonment option O Investment timing option O Growth option Consider the following example: King Snowplows began operations in New York City tw the majority of its business working for the city. The company also had offers from surrounding cities in and Long 1sland, but these offers would have required the company to invest in additional high up-front costs, King Snowplows decided to purchase only the snowplows n o years ago. As an independent contractor, the company does New Jersey snowplows-which have Snowplows decided to purchase only the snowplows necessary to handle its contract with the additional contracts with the cities in New Jersey and Long Island in the future if it thinks that the additional contracts justify investing in more snowplows 5 6