Multiple Choice
A firm has a three-year real option to invest in a project that has a present value of $500 million with an exercise price (in year 3) of $800 million. Calculate the value of the option given that N(d1) = 0.3 and N(d2) = 0.15. Assume that the risk-free interest rate is 6 percent per year.
A) $30.00 million
B) $49.25 million
C) zero
D) $7.08 million
Correct Answer:
Verified
Correct Answer:
Verified
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