Contrast the Difference Between the NPV of an Investment and the Value

question 20

Multiple Choice

Contrast the difference between the NPV of an investment and the value of the option to invest in it.

• A)The value of the option to invest increases with interest rates while the NPV decreases.
• B)The value of the option to invest decreases with an increase in short-term cash flows while NPV increases.
• C)The value of the option to invest and the NPV of the project are unrelated.
• D)The value of the option to invest increases with interest rates while the NPV decreases, and the value of the option to invest decreases with an increase in short-term cash flows while NPV increases.

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