Which of the Following Is a Real Option with Respect

question 112

Multiple Choice

Which of the following is a real option with respect to a capital budgeting decision?

• A) A call option on the company's stock.
• B) A put option on securities sold to finance the project.
• C) An option to expand the scale of the project.
• D) An option to purchase land that will be used for a manufacturing facility.

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Definitions:

Realized Gain

Profit from the sale of an asset or investment when the selling price exceeds the original purchase price.

Ordinary Income

Income earned through standard operations, including wages, salaries, commissions, and interest income, typically taxed at normal rates.

Schedule C

A document sole proprietors utilize to declare their business earnings and deductions to the IRS.

Form 1040

The typical form distributed by the Internal Revenue Service (IRS) for individuals to use when filing their yearly tax returns on income.