As a way to value growth opportunities, real options have had a difficult time catching on with managers. Many CFOs believe the method ensures the overvaluation of risky projects. This concern is legitimate, but abandoning real options as a valuation model isn't the solution. Companies that rely solely on discounted cash flow (DCF) analysis underestimate the value of their projects and may fail...

We provide an appropriate comprehensive model for assessing the likely contribution of current US government programs to alleviate homeownership financial distress. In a simulation of five available mortgage distress termination options plus continuation and repayment, the HAMP program appears to foster mortgage mitigation, given our parameter value assumptions, primarily through enabling and e...

We examine the asset pricing implications of a neoclassical model of repeated investment and disinvestment. Prior research has emphasized a negative relation between productivity and equity risk that results from operating leverage when capital adjustment is costly. In general, however, expansion and contraction options affect risk in the opposite direction: they lower equity risk as profitabil...

Farm structure and optimal farm size have always attracted the interest of research as they constitute some of the intense problems of farm efficiency and farm income. Although several approached have been employed to handle with this problem a real options approach can significantly contribute on this matter. This article provides an empirical example of applying real options approach in inves...

Port capacity investments are large, expensive and uncertain. They also involve long construction lead times. Therefore, choosing the timing size of port appropriately to serve trade growth is important. This paper presents a real options model value option single-phase (service) expansions with flexible investment under uncertainty. The moreover takes time into account. allows comparing in exp...

With the growing demand for investment projects in renewable energy, it is essential economic feasibility analysis to consider inherent uncertainties of these and enable more accurate decisions. In this way, we analyze whether photovoltaic panels produce electrical energy a forest nursery are economically viable through real options. We with an initial USD 90,417 panels. The managerial flexibil...