Option to expand what is the option to expand? Explain why we underest
QUESTION
Option to expand what is the option to expand? Explain why we underestimate NPV if we ignore this option.
en there is an option of increasing the production or increasing the price. Implementing these options will involve more cash inflows and outflows. Ignoring the option to expand will lead to exclusion of such cash flows from the analysis; hence the NPV will be underestimated.
ANSWER:
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.