You have just invested $1200 in a project. If a key regulation gets approved (with a probability of 45%) in one year, the project will generate $3000 two years from now. Otherwise, the project will generate only $500 two years from now. You have the option to walk away and receive a refund of $1272 one year from now, right after announcement of the regulation approval decision. The appropriate discount rate is 6%.

Calculate the value of this real option.

Answer rating: 100% (QA)

6 sol calculate the expected cash flows 045 3000 055x 500 ur 1625 grs D if ... View the full answer