Fundamentals of Capital Budgeting - Real Options in Capital Budgeting

3 important questions on Fundamentals of Capital Budgeting - Real Options in Capital Budgeting

What is a real option?

The right to make a certain decision

What are the three main real options mentioned in chapter 9?

Option to Delay
Option to Expand
Option to Abandon

What does the Option to Expand compromise?

Starting small and keeping the option to expand open

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