Nucor Case Study

5. Real options analysis (20 points)

Consider the following strategic (real) options situations:

• Is there benefit to waiting 1-2 years?
• Is there benefit to starting the project but then later abandoning      the project? In other words, how much of the $340 million investment is      redeployable for other uses if we decide to later stop the project?
• How should we think about possible growth options (i.e.,      consideration of plants beyond the first one)? Keep in mind that Ken would      ultimately like to build 3-4 plants.5. Real options analysis (20 points)

  Consider the following strategic (real) options situations:

  • Is there benefit to waiting 1-2 years?
  • Is there benefit to starting the project but then later abandoning      the project? In other words, how much of the $340 million investment is      redeployable for other uses if we decide to later stop the project?
  • How should we think about possible growth options (i.e.,      consideration of plants beyond the first one)? Keep in mind that Ken would      ultimately like to build 3-4 plants.