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nekit [7.7K]
3 years ago
10

Projects are also often embedded with different options that can help making decisions under uncertainty. There are techniques u

sed to evaluate these embedded options which are called real options. The models used to value these options are based on the type of the real option available for the project. Real options the value of capital investment projects.
A real option embedded in a capital project gives the investing firm the right but not the obligation to buy, sell, or transform an asset at a set price during a specified period of time.

a. True
b. False
Business
1 answer:
svp [43]2 years ago
4 0

Answer:

a. True

Explanation:

The real option should be used in the decision that made for the capital investment in order to rise the worth of the project. So it rise the capital investment value for the project. Also a real option in a capital asset provides the right to the investing firm but not the liability to purchase or sell or transform the asset at a fixed price

Therefore the given statement is true

You might be interested in
Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following u
DochEvi [55]

Answer:

Bens Corporation

Allocation of Service Departments' Direct Costs:

                               Repairs        HR           IT          M1         M2           Total    

Direct costs          $36,000  $55,600  $81,000                              $172,600

Step allocation:

HR direct costs        5,560   -55,600      11,120    19,460    19,460              0

IT costs                            0              0   -92,120    20,471     71,649              0

Repairs costs        -41,560              0             0    16,624    24,936              0

Total costs allocated      0              0             0 $56,555 $116,045 $172,600

Explanation:

a) Data and Calculations:

Usage data:

                      Repairs     HR       IT     M1      M2

Repairs                            0%     0%   40%   60%

HR                     10%       __     20%   35%   35%

IT                        0%       10%    __     20%   70%

HR Costs = $55,600:

Repairs = $5,560 ($55,600 * 10%)

IT = $11,120 ($55,600 * 20%)

M1 = $19,460 ($55,600 * 35%)

M2 = $19,460 ($55,600 * 35%)

IT costs = $92,120:

Repairs = $0 ($92,120 * 0%)

M1 = $20,471 ($92,120 * 20/90)

m2 = $71,649 ($92,120 * 70/90)

Repair costs = $41,560:

M1 = $16,624 ($41,560 * 40%)

M2 = $24,936 ($41,560 * 60%)

4 0
2 years ago
Read 2 more answers
Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership’s capital balances are Cait
natka813 [3]

Answer:

Pauls' share in partnership=(131000+91000+111000+171000)*0.15%= $75600

Balance in Caitlin’s capital account immediately after Paul’s admission = 131000-(75600-71000)*30%= $129160

6 0
3 years ago
Susanna strongly believes in the relationship between workplace communication and employee productivity, and she agrees with Ale
drek231 [11]

Answer:

The correct answer is number "2": allow them to continue for a reasonable amount of time.

Explanation:

According to Alex Pentland and Benjamin Waber’s "<em>Productivity through coffee breaks</em>", employees who relate to each other the most are more productive because as they have a certain knowledge of each one of them, they could make better work-related decisions.

In that case, as Susanna believes in Alex Pentland and Benjamin Waber’s research, she is likely to allow Steven and Amy to keep talking in Amy's cubicle for a reasonable time.

6 0
2 years ago
What are the benefits of hiring a teenage worker?
stealth61 [152]
Seen as it may be 1 of there first jobs you can pay them less because they don't have as much experience as someone has has worked in the job for years
3 0
3 years ago
Read 2 more answers
You are analyzing a project with an initial cost of £130,000. The project is expected to return £20,000 the first year, £50,000
Mashutka [201]

Answer: Net Present Value = -$19,062

Explanation:

First, we'll compute the PV for the respective years

Present Value (Year-1)

= 0.6211 \times [1 + (0.055 - 0.06)]^{1}

=0.6179945

Present Value (Year-2)

= 0.6211 \times [1 + (0.055 - 0.06)]^{2}

=0.614904528

Present Value (Year-3)

= 0.6211 \times [1 + (0.055 - 0.06)]^{3}

=0.611830005

Now, we'll compute the Cash Flow for the respective years

Cash Flow (Initial)

= -130,000\times (\frac{1}{0.6211} )

= -$209,306.07

Cash Flow (Year-1)

=20,000\times (\frac{1}{0.61799} )

=$32,362.75

Cash Flow (Year-2)

=50,000\times (\frac{1}{0.61490} )

=$81,313.44

Cash Flow (Year-3)

= 90,000\times (\frac{1}{0.611830} )

=$147,099.68

Net Present Value:

= -$209,306.07 + ($32,362.75/1.141)+ ($81,313.44/1.142) +($147,099.68/1.143)

= -$209,306.07 +$28,388.38 + $62,568.05 + $99,288.10

= -$19,062

3 0
3 years ago
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