value distribution of which the mean value is interpreted to be the option value. With certain boundary conditions, the DM option can be reformulated algebraically as a conditional expectation of a lognormal distribution similar to the form and characteristics of a typical financial option, such as the European, single stage Black-Scholes financial option. This section illustrates the transformation of the DM real option to its algebraic lognormal form and its relationship to the Black-Scholes financial option formula. The process illuminates some of the more technical elements of the option formulation thereby providing further insight to the underlying concepts. The lognormal form of the DM Method remains a simple concept based on the same computation procedures as the simulation form. It is the conditional expectation of the discounted projected future value outcome distribution, , less a predetermined purchase cost (strike price or launch cost), , (modeled in this example as a scalar value) multiplied by the probability of that truncated distribution greater than a threshold—nominally 0. A conditional expectation is the expected value of the truncated distribution (mean of the tail), MT, computed with respect to its conditional probability distribution (Fig. 3). The option calculation procedure values the project investment (option purchase), C0, at T0. For the DM option the time differentiated discounting (R and r) results in an apparent shift of the projected value outcome distribution, , relative to the , or the scalar mean in the example shown in Fig. 4. This relative shift sets up the conditional expectation of the truncated distribution at T0. In a lognormal distribution for a project future value outcome, , both the mean, , and standard deviation, , must be specified. The standard deviation, , of the distribution is proportionately discounted along with the distribution, The parameters of , of a lognormal distribution at T0 can be derived from the values respectively, as: The conditional expectation of the discounted value outcome is the mean of the tail MT: is the cumulative distribution function of the standard normal distribution (N(0,1)). The probability of the project being in the money and launched (“exercised”) is The project investment (option) value is: The involved lognormal mathematics can be burdensome and opaque for some business practices within a corporation. However, several simplifications can ease that burden and provide clarity without sacrificing the soundness of the option calculation. One simplification is the employment of the standard normal distribution, also