explain selling price in real options. NPV?

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September 8, 2015 at 7:44 pm #270518
titobi
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Please explain selling prices and exercises in the black scholes real options. Is it jus NPV or future NPV?.
September 9, 2015 at 7:31 am #270566
John Moffat
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It depends on the question and on the type of real option.

If, for example, it is an option to delay, then the Pe is the capital expenditure and Pa is the present value (not the NPV) of the future flows.
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