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Question 20.ss.4: Your company is considering opening a new factory in Europe ...

Your company is considering opening a new factory in Europe to serve the growing demand for your product there. What real options might you want to consider in your capital budgeting analysis of the factory?

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Several significant real options might be associated with the factory. First, by having a factory in Europe, and the employees and management associated with it, your company might be better positioned to introduce products to the European markets. In addition, you will have options to change operations, to sell the factory, or to simply abandon the project.

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