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Real options

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Real options

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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  • December 23, 2020 at 12:52 pm #600651
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    sir Value of an underlying asset in real options is taken to be PV of future cash flows from the decision date, so that will include any further cash inflows(apart from exercise price- like further outflow 2-3 yrs after decision date) and outflows both, right?

    or just PV of inflows from decision date are included in Value of underlying asset(Pa-B&Sformula)?

    December 23, 2020 at 1:49 pm #600664
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54738
    • ☆☆☆☆☆

    It is your first paragraph that is correct.

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