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Norma-Jean [14]
3 years ago
14

Which one of the following is an example of a "flexibility" option? Group of answer choicesA company has an option to close down

an operation if it turns out to be unprofitable. A company agrees to pay more to build a plant in order to be able to change the plant's inputs and/or outputs at a later date if conditions change. A company invests in a project today to gain knowledge that may enable it to expand into different markets at a later date. A company invests in a jet aircraft so that its CEO, who must travel frequently, can arrive for distant meetings feeling less tired than if he had to fly commercial. A company has an option to invest in a project today or to wait a year. Next
Business
1 answer:
mixas84 [53]3 years ago
3 0

Answer:

A company agrees to pay more to build a plant in order to be able to change the plant's inputs and/or outputs at a later date if conditions change.

Explanation:

Real option analysis

This is simply described as a form of an analysis of capital budgeting projects. It is often used by managers so as to influence the size and riskiness of a project's cash flows. And this can be done only by taking different actions or at the end of the project's life.

It uses the usual NPV capital budgeting analysis along with an analysis of opportunities as a result of manager's responses to changing circumstances that can change a project's outcome.

Examples of Real Options

1. Investment timing

2. Abandonment/shutdown

3. Flexibility

4. Growth/expansion

Flexibility Option

This type of re option simply allows operations to be changed based on how conditions change during a project's life. It is said to exists when it is useful spending money today, which therefore helps one to maintain flexibility down the line. That is, either inputs or outputs (or both) can be altered.

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Explanation:

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The selection of channels influences the consumer's perception of the brand, and directly impacts the creation of the brand value for the customer.

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You need to have $35,000 on hand to buy a new Lexus five years from today. To achieve that goal, you want to know how much you m
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Answer:

:(A) present value factors

Explanation:

Given that you  need to have $35,000 on hand to buy a new Lexus five years from today. To achieve that goal, you want to know how much you must invest today in a certificate of deposit guaranteed to return you 3% per year.

i.e. we have to calculate how much to invest when we want to have 35000 dollars on hand after 5 years from today.

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So we have to find the present value factor

The formula used is if P is to be invested

P(1.03)^t = 35000 $ assuming compound interest.

So P = 35000 (1.03)^(-t)

Thus we are calculating present value factor

Answer is

:(A) present value factors

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