Consider the company Dyonis Ltd., a producer of luxury soaps. The net present value from its current production process evolves over time (with constant factors and ) . Dyonis Ltd. has the possibility to abandon its business in three years (t=3).Now assume that the company can decide to abandon the business in every period t instead of only at t=3.Which statement is most likely to be correct?
◯ The value of the option to abandon decreases when we have the possibility to abandon at every period instead of only at =3, because more decisions nodes are added.
◯ The value of the option to abandon increases when we have the possibility to abandon at every period instead of only at =3, especially when we now decide to abandon before =3.
◯ If we still decide to abandon the option only at t=3, then the value of the option decreases.
◯ The value of the option to abandon does not change when we have the possibility to abandon at every period instead of only at =3. Even if we now decide to abandon before =3.