Question

g If Billingham knows that it can sell the​ XC-750 to another firm for $2.17 million in two​ years, what kind of real option would that​ provide? ​(Select the best​ choice.) A. The decreased production will also require decreased inventory. B. This provides Billingham the option to abandon the investment. C. The firm can recover the feasibility study cost. D. Billingham will no longer depreciate the machine.

Answer 1

B. This provides Billingham the option to abandon the investment.

Step-by-step explanation:

In the case when Billingham knows that the XC-750 would be sell to the other firm for $2.17 million for the two years so in this case, the real option that could be provided is that Billingham should abandon the investment as it is beneficial for the company due to which the company is not able to suffered the loss otherwise the chances of the loss is very high