The Options Approach to Capital Investment

Give an example in business for each of the following real options with clear explanations. If you manage to put some numbers in your examples and sketch how you may value such optionality the better but not required.

The option to expand if the immediate investment project succeeds.

The option to wait (and learn) before investing.

The option to shrink or abandon a project.

Use your textbook, LIRN-based research, a general reference list in international Economics, such as: Specialized Journals, General Journals, Sources of International Data, General Current information, and the Internet Sources.

Document your citations throughout the text of your paper; APA is the accepted format . Your papers must include:

– an introduction and a clear thesis,

– several body paragraphs, and

– a conclusion.