The True Expected Value of a Project with a Growth

question 29

True/False

The true expected value of a project with a growth option is the expected NPV of the project (including the value of the option)less the cost of obtaining that option.

---

Definitions:

Investment

Allocation of resources, usually money, in the expectation of generating an income or profit.

Maturity Value

The amount payable to the holder of a financial instrument at the end of its term, including both the principal and interest.

Investment

Investment refers to the act of allocating resources, usually money, with the expectation of generating an income or profit.

Periodic Interest Rate

The interest rate charged on a loan or realized on an investment over a specific period of time.