If you require a payback period within 3 years, without considering TVM, would you take a project that costs $10,000 at t=0 and returns $3,000 each year for 10 years? ( Single Choice)

Answer 1: yes

Answer 2: no

What is an example of a real option? ( Single Choice)

Answer 1: option to halt

Answer 2: option to terminate

Answer 3: option to expand

A firm has limited land (10 acres) to build factories. Factory X takes 2 acres and NPV=$6m; Y takes 4 acres and NPV=$8m; Z takes 6 acres and NPV=$10m. Which project(s) should we take? ( Single Choice)

Answer 1: X, Y

Answer 2: X, Z

Answer 3: Y, Z