The Sunk Cost and the Real Option Pricing Model

Table 1

Variables between real and financial options in the B-S model.

Parameters	Real options	Financial options
	The current market price of the underlying real assets	The current market price of the underlying financial assets
	Exercise price determined by the initial investment cost	The strike price in an option contract
	The time to expiration of the option	The time to expiration of the option
	The volatility of project value	The volatility of the financial asset price
	Risk-free interest rate	Risk-free interest rate