Real option analysis treats cash flows in terms of future value in a positive sense, whereas DCF treats future cash flows negatively.

Name: Real option analysis treats cash flows in terms of future value in a positive sense, whereas DCF treats future cash flows negatively.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Real option analysis considers the potential upside of future cash flows, while DCF focuses on the present value of future cash flows, which can be negative if the discount rate is higher than the expected return.

Real Option Analysis Treats Cash Flows in Terms of Future