SIMULATION OF THE IMPLEMENTATION OF REAL OPTIONS IN PETROLEUM PROJECTS IN INDONESIA
The real option is a method of developing discounted cash flow. This method provides flexibility that is not in the discounted cash flow method. Real options basically use the same approach as financial options in general, consequently several methods used in finance can be used in real options. O...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/46306 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | The real option is a method of developing discounted cash flow. This method provides flexibility that is not in the discounted cash flow method. Real options basically use the same approach as financial options in general, consequently several methods used in finance can be used in real options. One method used in the real option is the lattice method and the binomial state price method. One example of implementing a real option is to calculate the project value in the oil field. Adding learning features to the implementation of real options can help project managers to increase project value estimates. This feature was developed based on the simple thought that at the beginning of the project the uncertainty was very high but would get smaller over time. In addition, in calculating the value of options with state prices, this method provides some convenience because cash flow is certain to change after decision making at that time. In this thesis the two methods above are used in order to solve real option problems in the oil sector in Indonesia.
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