Estimate value of the option using the black-scholes model

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Question: Rework Problem using the Black-Scholes model to estimate the value of the option: The risk-free rate is 6 percent. (Hint: Assume the variance of the project's rate of return is 1.11 percent.)

Problem: 1. In general, do timing options make it more or less likely that a project will be accepted today?

2. If a company has an option to abandon a project, would this tend to make the company more or less likely to accept the project today?

Reference no: EM131525274

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