Including the option to expand in your project analysis will tend to:
A)extend the duration of a project but not affect the project's net present value.
B)increase the cash ﬂows of a project but decrease the project's net present value.
C)increase the net present value of a project.
D)decrease the net present value of a project.
E)have no effect on either a project's cash ﬂows or its net present value.

Question

Quizplus · Accepted Answer

Including the option to expand in project analysis adds value because it provides the flexibility to capitalize on favorable market conditions in the future, thereby potentially increasing the project's net present value (NPV) by adding potential future cash flows.

Including the Option to Expand in Your Project Analysis Will