Cash Flow Estimation and Risk Analysis: Real Options DCF analysis doesn't always lead to proper capital budgeting decisions because capital budgeting projects are not -Select investments like stocks and bonds. Managers can often take positive actions after the investment has been made to alter a project's cash flows. These opportunities are real options that offer the right but not the obligation to take some future action. Types of real options include abandonment, investment timing, expansion, output flexibility, and input flexibility. The existence of options can -Select-projects' expected profitability, -Select their calculated NPVs, and -Selecttheir risk