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Which of the following statements is correct in relation to real option analysis? Real option analysis is important only when there is a high likelihood
Which of the following statements is correct in relation to real option analysis? Real option analysis is important only when there is a high likelihood of new information arriving during the life of the project, and when managers are able to respond to the new information. None of the other statements is correct in relation to real option analysis. The fact that the projects are evaluated using a hurdle rate lower than WACC is evidence consistent with managers using real option analysis. More than one of the other statements is correct in relation to real option analysis. The option to abandon a project should never be exercised early if no cash flow is expected during the option life
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