Example of flexibility option

Assignment Help Financial Management

Reference no: EM131851634

Which one of the following is an example of a "flexibility" option? a. a company has an option to invest in a project today or to wait a year. b. a company has an option to close down an operation if it turns out to be unprofitable. c. a company agrees to pay more to build a plant in order to be able to change the plant's input and/or outputs at a later date if conditions change d. a company invests in a project today to gain knowledge that may enable it to expand into different markets at a later date e. a company invests in a jet aircraft so that it's CEO, who must travel frequently, can arrive for distant meetings feeling less tired than if he had to fly commercial.

Reference no: EM131851634

Questions Cloud

Currently expected to pay annual dividends : Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.7 million shares that are outstanding.

Evaluate the present value of introduction of new chip : What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?

Bond prices and interest rate changes : Bond Prices and Interest Rate Changes. What is the change in price the bond will experience in dollars?

What is the terminal cash flow at the end of year three : Your company is considering expanding operations and buying new machine to handle increased volume. What is the terminal cash flow at the end of year 3.

Example of flexibility option : Which one of the following is an example of a "flexibility" option? A company has an option to invest in a project today or to wait a year.

What is the total initial investment outlay for expansion : What is the total initial investment outlay for the expansion (i.e. CF0)?

What must the expected return on the market be : A stock has an expected return of 14.8 percent, its beta is 1.40, and the risk-free rate is 3.1 percent. What must the expected return on the market be?

Deposit amount-deposit each year to achieve your goal : You want to have $1 million in real dollars in an account when you retire in 30 years. What real amount must you deposit each year to achieve your goal?

How much can ashley contribute if she files separate return : How much can Ashley contribute to her Roth IRA if they file a joint return? How much can Ashley contribute if she files a separate return?

User Account

All Pages