Rao Research regularly takes real options into account when evaluating its proposed

projects. Specifically, it considers the option to abandon a project whenever it turns out

to be unsuccessful $($the abandonment option$),$ and it evaluates whether it is better to

invest in a project today or to wait and collect more information $($the investment timing

option$).$ Assume the proposed projects can be abandoned at any time without penalty.

Which of the following statements is CORRECT?

a$.$ If there are important first$-$mover advantages, this tends to increase the value of

waiting a year to collect more information before proceeding with a proposed project.

b$.$ The abandonment option tends to reduce a project's risk.

c$.$ A project can either have an abandonment option or an investment timing option, but

never both.

d$.$ The abandonment option tends to reduce a project's NPV$.$

e$.$ Investment timing options always increase the value of a project.