An abandonment option is the option to walk away.Abandonment options can ________ a project because a firm can drop a project if it turns out to be unsuccessful.
A) add value to
B) subtract value from
C) keep the value of
D) none of the above

Question

Quizplus · Accepted Answer

Abandonment options can be seen as a form of risk management that adds value to a project. By having the option to walk away from a project that is not performing well, a firm can avoid sinking further resources into a project that may ultimately result in losses. This flexibility can increase the overall value of the project.

An Abandonment Option Is the Option to Walk Away