Real options give the holder the right, but not the obligation, to undertake business decisions-typically those that involve capital investments. Real options exist when which of the following occurs? O When managerial actions can alter a project's cash flow stream and hence, its value When you can sell a predetermined number of shares of stock in the future When a project produces foreign-denominated cash flows When you can repeat a project multiple times The presence of managerial, or real, options the value of an investment project. Which of the following statements is most accurate about real options? O Real options always give managers the flexibility to decide to either invest in a project or wait to make a more calculated decision at a later date. O Real options can give managers the flexibility to decide to either invest in a project or wait to make a more calculated decision at a later date. O Real options restrict managers to waiting before deciding on making an investment in a project. O Real options do not give managers the flexibility to decide to either invest in a project or wait to make a more calculated decision at a later date. Different methods are used to look for real options and valuing them. The following table lists five possible methods. Select their order of simplicity with 1 being the most simple procedure and 5 being the most difficult procedure. 1 2 3 4 5 Technique Use discounted cash flow valuation and Ignore any real options by assuming their values are zero. O o 0 o Use a standard model for a financial option. 0 o o o 0 0 Oo Develop a unique, project-specific model by using financial engineering techniques. 0 0 0 Use decision-tree analysis. 0 o 0 o o o Use discounted cash flow valuation and include a qualitative recognition of any real option's value. 0 a 0 0