Answers the questions pictured and use the information for this last questionThis example describes a real option to ____(expand or abandon)

Certain real options allow companies to change capacity output in response to changing market conditions. 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 life? Abandonment option Expansion option Timing option Flexibility option Consider the following example: Clemens Inc. is considering a $100 million investment in a new line of soft drinks. However, $100 million is a huge investment for Clemens; if things turn bad, it could wipe out the company. A few senior managers have suggested a smaller investment of $20 million to see if the market is as strong as they hope it is. If demand is strong and the opportunity is still available, Clemens will increase its investment at a later date