The Potential Decision to Abandon a Project Has Option Value

question 88

Multiple Choice

The potential decision to abandon a project has option value because:

• A)abandonment can occur at one specific point in the future.
• B)a project may be worth more dead than alive.
• C)management is locked into a negative outcome.
• D)future demand may exceed expectations.
• E)the project may be worth more if its commencement is delayed.

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Definitions:

Negative Impact

Adverse effects or harm resulting from a particular action or event.

Divestitures

The act of selling off or otherwise disposing of a business unit or asset, often for strategic, financial, or regulatory reasons.

Restructuring

The process of organizing a company, department, or team in a new way to reduce costs or improve efficiency.

Public Relations

The professional maintenance of a favorable public image by a company, organization, or famous person.