The option to abandon a project inexpensively has particular value when:
A) the equipment has a ready second-hand value.
B) you can be confident about future profits.
C) the project looks to have a very large NPV.
D) has a low degree of operating leverage.

Question

Quizplus · Accepted Answer

The option to abandon a project inexpensively is valuable when the equipment has a ready second-hand value, as it allows the company to recover some costs if the project is not successful.

The Option to Abandon a Project Inexpensively Has Particular Value