1. Boundless Lecture Slides Free to share, print, make copies and changes. Get yours at www.boundless.com Available on the Boundless Teaching Platform

2. Using Boundless Presentations The Appendix The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. Free to share, print, make copies and changes. Get yours at www.boundless.com Boundless Teaching Platform Boundless empowers educators to engage their students with affordable, customizable textbooks and intuitive teaching tools. The free Boundless Teaching Platform gives educators the ability to customize textbooks in more than 20 subjects that align to hundreds of popular titles. Get started by using high quality Boundless books, or make switching to our platform easier by building from Boundless content pre-organized to match the assigned textbook. This platform gives educators the tools they need to assign readings and assessments, monitor student activity, and lead their classes with pre-made teaching resources. Get started now at: If you have any questions or problems please email: educators@boundless.com http://boundless.com/teaching-platform

3. Boundless is an innovative technology company making education more affordable and accessible for students everywhere. The company creates the world’s best open educational content in 20+ subjects that align to more than 1,000 popular college textbooks. Boundless integrates learning technology into all its premium books to help students study more efficiently at a fraction of the cost of traditional textbooks. The company also empowers educators to engage their students more effectively through customizable books and intuitive teaching tools as part of the Boundless Teaching Platform. More than 2 million learners access Boundless free and premium content each month across the company’s wide distribution platforms, including its website, iOS apps, Kindle books, and iBooks. To get started learning or teaching with Boundless, visit boundless.com.boundless.com Free to share, print, make copies and changes. Get yours at www.boundless.com About Boundless

4. Other Considerations in Capital Budgeting The Role of Risk in Capital Budgeting > Other Considerations in Capital Budgeting Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance?campaign_content=book_192_section_101&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=di rect&utm_source=boundless

5. Traditional NPV analysis fails to consider that management can adapt and revise its strategies in response to unexpected market and technological developments that cause cash flows to deviate from their original expectations. The notion of real options was developed from the idea that one can view firms' discretionary investment opportunities as a call option on real assets, in much the same way as a financial call option provides decision rights on financial assets. The option to defer an investment creates value because exogenous uncertainty can be reduced with the passage of time. Growth options are investments made not only for immediate cash flows from the project, but also for the economic value derived from subsequent investment opportunities. Other Considerations in Capital Budgeting Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/the-role-of-risk-in-capital-budgeting-12/other-considerations-in-capital- budgeting-101/other-considerations-in-capital-budgeting-432- 7639?campaign_content=book_192_section_101&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boun dless Project Cash Flow With Uncertainty View on Boundless.com The Role of Risk in Capital Budgeting > Other Considerations in Capital Budgeting

6. Free to share, print, make copies and changes. Get yours at www.boundless.com Appendix

7. Key terms net present value the present value of a project or an investment decision determined by summing the discounted incoming and outgoing future cash flows resulting from the decision propensity A tendency, preference, or attraction. Free to share, print, make copies and changes. Get yours at www.boundless.com The Role of Risk in Capital Budgeting

8. Project Cash Flow With Uncertainty Projects with real options can be evaluated using a range of possible profits. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia. "Datar Mathews Real Option Method Wikipedia Fig 1 Typical Project Cash Flow with Uncertainty." CC BY-SA http://commons.wikimedia.org/wiki/File%253ADatar_Mathews_Real_Option_Method_Wikipedia_Fig_1_Typical_Project_Cash_Flow_with_Uncertainty.jpg View on Boundless.comCC BY-SA http://commons.wikimedia.org/wiki/File%253ADatar_Mathews_Real_Option_Method_Wikipedia_Fig_1_Typical_Project_Cash_Flow_with_Uncertainty.jpgView on Boundless.com The Role of Risk in Capital Budgeting

9. Free to share, print, make copies and changes. Get yours at www.boundless.com The Role of Risk in Capital Budgeting Obtaining an options is useful when making investment and capital budgeting decisions because ____. A) All of these answers. B) it generates future decision rights. C) it can reduce exogenous uncertainty. D) it allows the firm to abandon unprofitable investments or projects.

10. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Role of Risk in Capital Budgeting Obtaining an options is useful when making investment and capital budgeting decisions because ____. A) All of these answers. B) it generates future decision rights. C) it can reduce exogenous uncertainty. D) it allows the firm to abandon unprofitable investments or projects.

11. Attribution Gilad Feldman. "REAL OPTIONS THEORY [Management & Social Psychology WIKI]." CC BY-SA http://wiki.mgto.org/real_options_theoryCC BY-SA http://wiki.mgto.org/real_options_theory Wiktionary. "propensity." CC BY-SA 3.0 http://en.wiktionary.org/wiki/propensityCC BY-SA 3.0http://en.wiktionary.org/wiki/propensity Wiktionary. "net present value." CC BY-SA 3.0 http://en.wiktionary.org/wiki/net+present+valueCC BY-SA 3.0http://en.wiktionary.org/wiki/net+present+value Free to share, print, make copies and changes. Get yours at www.boundless.com The Role of Risk in Capital Budgeting