When modeling the right to develop an oil property as a real option, and in the presence of fixed costs, using oil price volatility in the option-pricing model will __________ the value of the option.

a. underestimate because the value of the option depends on the volatility of cash flow (profit)

b. underestimate because the value of the option depends on the volatility of revenue

c. overestimate because the value of the option depends on the volatility of revenue

d. overestimate because fixed costs make revenue more volatile than profit

NOTE: This question is already on Chegg, however the answer is incorrect (option c was marked wrong) so please don't copy that answer