Which of the following situations has a real option embedded within it?

Having a bond that pays coupons throughout its life

Having a factory that can be powered by two types of energy

Having a call option that has just now expired in-the-money

Having a traditional NPV analysis that shows a positive NPV.

Having a dividend paying stock where the firm pays the same dividend year after year NPV analysis is the model of choice for many reasons, but does suffer from which of the following shortcomings?

The fact that the decision rule changes for non-standard projects

The inability to rank mutually exclusive projects correctly

The inability to incorporate the time value of money into decisions

The chance that the rule will produce two NPVs for the same project, both satisfying the definition of NPV

The inability to incorporate new information once the project is underway In the 3-door/Let's Make a Deal/Monty Hall problem, once you pick a door, the host opens one of the other two doors. At that moment, in the context of a decision tree, which node are you at?

Abandonment node

Decision node

Information node

Root node

Terminal node

Which of the following is an example of a sunk cost?

		Research and development expenses
		Expected salvage value
		Variable costs in the year just ahead
		Fixed costs in the year just ahead
		Recovery of working capital