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Real Options

This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.

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December 2, 2020 at 1:16 am #597306
Noah098
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“High uncertainty within NPV context will result in a higher discount rate and a lower NPV. However, with such uncertainty any embedded real options will become more valuable.”
Sir I did not quite understand the second part from ” However…valuable”. would you mind delving deeper into it?
Many thanks!
December 2, 2020 at 9:25 am #597348
John Moffat
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The whole benefit of options is that they give the ability to do something different at some point in the future. The more uncertain we are about what will happen in the future then the more benefit there is of having the right to do something different.
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