To think critically about: The option to abandon and the reason for underestimating the net present value if the option to abandon is ignored. Introduction: The contract that provides its owner the right to sell or buy some assets at a fixed price before or on the given date is called an option.

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Chapter 24, Problem 11CRCT

Summary Introduction

To think critically about: The option to abandon and the reason for underestimating the net present value if the option to abandon is ignored.

Introduction:

The contract that provides its owner the right to sell or buy some assets at a fixed price before or on the given date is called an option.

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