Which of the following is NOT a typical real option in capital budgeting?
A) The option to expand the project
B) The option to abandon the project
C) The option to reduce the scale of a project
D) The option to discount the project at a lower rate of return

Question

Quizplus · Accepted Answer

The option to discount the project at a lower rate of return is not a typical real option in capital budgeting. Real options typically involve decisions regarding future flexibility in continuing, expanding, scaling back, or abandoning a project. Discount rate decisions are part of the initial analysis of a project, but not typically considered a real option.

Which of the Following Is NOT a Typical Real Option