Using the real- options approach what action would you recommend in relation to a project of low volatility where the value- to- cost was 0.5.
A) Never invest
B) Invest now
C) Probably never invest
D) Probably invest later

Question

Quizplus · Accepted Answer

The value-to-cost ratio is less than 1, indicating that the project is not profitable. Therefore, the best action is to never invest.

Using the Real- Options Approach What Action Would You Recommend