The option to wait has a value equal to the net present value of the project if it is started today versus the net present value if it is started at some later date.

Question

Quizplus · Accepted Answer

The option to wait has value because it allows decision-makers to defer investment and gather more information, potentially leading to better outcomes. It is not simply the difference between the net present values of starting now versus starting later, but also includes the value of flexibility and additional information obtained by waiting.

The Option to Wait Has a Value Equal to the Net