Multiple Choice
A firm has a two-year real option to invest in a project that has a present value of $400 million with an exercise price (in year 2) of $600 million. Calculate the value of the option given that N(d1) = 0.6 and N(d2) = 0.4. Assume that the risk-free interest rate is 6 percent per year.
A) $26.4 million
B) zero
C) $239.59 million
D) $13.58 million
Correct Answer:
Verified
Correct Answer:
Verified
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