The Option to Wait

question 31

Multiple Choice

The option to wait:
I.may be of minimal value if a project is dependent upon rapidly changing technology.
II.is partially dependent upon the discount rate applied to the project being evaluated.
III.is defined as temporarily shutting down a project for a period of time.
IV.has a value equal to the NPV of a project if it is started at a later date minus the NPV if the project is started today.

• A)I and III only
• B)II and IV only
• C)I and II only
• D)II, III, and IV only
• E)I, II, and IV only

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Definitions:

Standard Error

The standard deviation of the sampling distribution of a statistic, typically mean, estimating the variability.

Confidence Interval

A lineup of values, acquired through sample analysis, supposed to include the unascertained value of a population parameter.

Sample

A smaller group chosen from a larger population for the purposes of conducting surveys, observations, or interviews to gather data representative of the whole population.