The Difference Between the NPV of the Investment and the Value

question 50

Multiple Choice

The difference between the NPV of the investment and the value of the option to invest is:
I. The value for the option to invest still have a positive value at high interest rates while the NPV could be negative.
II. The value of the option to invest has a negative value at low interest rates while NPV
Could have high positive value.
III. The value of the option to invest and the NPV of the project are unrelated.

• A) I only
• B) II only
• C) III only
• D) II and III only

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