Projects are also ofter embedded with different options that can help making decisions under uncertainty. There are techniques used to evaluate these embedded options which are called real options. The modets used to value these options are based on the type of the real option available for the project. True or False: A real option embedded in a capital project gives the investing firm the right but not the obligation to bury, sell, or transfer an asset at a set price during a specified period of tame. True False The managers of Collins Construction Co. have induded a shutdown option into the design of a proposed capital investment project: 1. This option provides a firm with the flexibility to make potentially profitable investments in the future that would not have been possible if the initial proyect had not been undertaken II. This option allows a firm to temporarily terminate operations in order to prevent experiencing negative cash flows. 1II. This option allows a project to be expanded if demand turns out to be greater than expected. IN. This option allowrs the outputs of the production process to be alrered if market conditions change during a project's life. Which of the listed statements best describes a shutdown option? Statement II Statement 1 Statement III Statement IV None of the statements listed above describes a shutdown option. Real option analysis adds value to a project when it is used for which of the following? Check all that apply. Modifying the way that decision makers perceive floxibility in capital budgeting activities Making changes to the capital budget before it is started and financed Making managerial decision makirg less deliberate and analytical Expanding the way that managers view risk and uncertanty, seeing them as phenomena to be appreciated and exploited rather than feared and avoided