6. Real options Complete the following table by matching option types with correct descriptions. Option type...

Transcribed Image Text:

6. Real options Complete the following table by matching option types with correct descriptions. Option type Growth option Abandonment option Investment timing option Flexibility option Real option Description Allows reducing capacity or temporarily suspending operations Allows delaying major expenditures until more information is available Aa Aa Allows entrance into a new geographical market Allows adjusting operations based on changing conditions during a project's life Allows managers to influence the returns on a project Lumia Inc. is a firm that produces iPlanes, but Lumia's management thinks that, later on, it might want to switch production to iCars. Which of the following real options would be the best choice for Lumia's management? Growth option Abandonment option Flexibility option Investment timing option 6. Real options Complete the following table by matching option types with correct descriptions. Option type Growth option Abandonment option Investment timing option Flexibility option Real option Description Allows reducing capacity or temporarily suspending operations Allows delaying major expenditures until more information is available Aa Aa Allows entrance into a new geographical market Allows adjusting operations based on changing conditions during a project's life Allows managers to influence the returns on a project Lumia Inc. is a firm that produces iPlanes, but Lumia's management thinks that, later on, it might want to switch production to iCars. Which of the following real options would be the best choice for Lumia's management? Growth option Abandonment option Flexibility option Investment timing option

Answer rating: 100% (QA)

Growth Option Allows entrance into a new geographical m... View the full answer