Project options valuation with net present value and decision tree analysis

• Main Authors: DE REYCK, Bert, DEGRAEVE, Zeger, VANDENBORRE, Roger
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2008
• Subjects: Decision analysis; Finance; Investment analysis; Real options analysis; Scenarios; Business Administration, Management, and Operations; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6752; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7753/viewcontent/1_s2.0_S037722170601099X_main.pdf
• Institution: Singapore Management University

Real options analysis (ROA) has been developed to correctly value projects with inherent flexibility, including the possibility to abandon, defer, expand, contract or switch to a different project. ROA allows computing the correct discount rate using the replicating portfolio technique or risk-neutr...