Respond to the following comments. a. “You don’t need option

Respond to the following comments.

a. “You don’t need option pricing theories to value flexibility. Just use a decision tree. Discount the cash flows in the tree at the company cost of capital.”

b. “These option pricing methods are just plain nutty. They say that real options on risky assets are worth more than options on safe assets.”

c. “Real-options methods eliminate the need for DCF valuation of investment projects.”


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