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Investment appraisal - technical article

Aa.samaa10y ago
sir, do we have to add the option to delay ( call option value) and NPV value to find the total project value?
John MoffatJohn MoffatTutor10y ago#1
No. The previous examiner did so in his answer (and for that reason most revision kits, and I am afraid my lecture also, do add the value of the option). However, he was wrong and that is the reason for the article. Using the formula gives the total value of the project including the option. (The value of the option itself is the different between what you get from the formula and what the NPV is ignoring the option)
Aa.samaa10y ago#2
Thankyou Sir ?
John MoffatJohn MoffatTutor10y ago#3
You are welcome :-)
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