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You work for a popular chain of casual burrito restaurants. You are debating whether to close the Lewisburg location, which is currently unprofitable. Because there
You work for a popular chain of casual burrito restaurants. You are debating whether to close the Lewisburg location, which is currently unprofitable. Because there is uncertainty regarding the future variable cost per burrito, you sent a financial analyst off to value the real option to delay abandonment for 1-year. The intrinsic value of the decision to close the restaurant she calculated is $300,000. You cannot read her writing for the option value, but the time value is $-50,000. Should you close the restaurant today, decide in one year, or not at all
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