Real options approach: Case study applied to a nursery to produce Eucalyptus forest seedlings in Brazil

Aim of study: We checked if an infrastructure investment project for a nursery to produce Eucalyptus forest seedlings using the real options approach was economically viable, in order verify influence deferral, expansion and abandonment on value, as well their concatenation.
 Area Our study based technical-economic coefficients be installed São Paulo’s state Midwest region, Brazil.
 Material methods: The assessed by addressing uncertainties inherent project. used dynamic model option and, determine volatility project, we applied Monte Carlo simulation method. As employed expansion, abandonment.
 Main results: Using traditional valuation methodology, obtained negative static net present value USD 50,957. When incorporating abandonment, deferral form managerial flexibility managers, expanded 216,498, that is, 524.8% valuation. method evaluation undervalues infrastructures nursery, increase flexibility, through promotes managers enables feasibility project.
 Research highlights: Infrastructure is not viable economic techniques. However, flexibilities, options, valued it became viable.