Projects are also often embedded with different options that can help making decisions under uncertainty. There are techniques used to evaluate these embedded options which are called real options. The models used to value these options are based on the type of the real option available for the project. Real options increase the value of capital investment projects. The managers of Atlanta Aeronautics Co. have included an abandonment option into the design of a proposed capital investment project: I. This option allows a firm to shut down a project if its cash flows are lower than expected. II. This option allows a project to be expanded if demand turns out to be greater than expected. III. This option allows the outputs of the production process to be altered if market conditions change during a project's life. IV. This option allows a firm to postpone a project until it can gather more information or market conditions change. Which of the listed statements best describes an abandonment option? Statement I Statement II Statement III Statement IV None of the statements listed above describes an abandonment option. Real option analysis adds value to a project when it is used for which of the following? Check all that apply. Increasing the riskiness of the capital project and decreasing the project's cash flows Making managerial decision making less deliberate and analytical Making changes to the capital budget before it is started and financed Expanding the way that managers view risk and uncertainty, seeing them as phenomena to be appreciated and exploited rather than feared and avoided