VALUATION OF RUSUNAMI PROJECTS USING REAL OPTIONS METHOD WITH REGARDING VOLATILITY CHANGE

• Main Author: Nur Arifin, Rio
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/24019
• Institution: Institut Teknologi Bandung

Inaccurate decisions in investing in a project may lead to disadvantages to the company. Therefore, we need a tool that can measure the value of a project which considers all the possibilities that may occur along the way. The method of Discounted Cash Flow (DCF) which is commonly used for project value has not been able to answer the many uncertainties that will be encountered in the project's proceedings, so that the value of the project obtained does not reflect the actual value especially for long-term projects. The real options method by building future project values follows Geometric Brownian Motion (GBM) and built using binomial lattice considers the manager's options. The uncertainty in the project that continues to diminish as a result of the learning process is considered in the calculation resulting in reduced volatility. Guthrie (2010) proposes a binomial lattice model with volatility changes by incorporating learning options. Haahtela (2010) also proposed a trinomial lattice method with volatility changes using modified trinomial lattice. In this final project, the methods are applied in the valuation of rusunami project.