Traditional valuation tools do not adequately support management’s decisions because they ignore the benefits of managers’ flexibility and future opportunities. A new technique for evaluating strategic investment decisions is the real options approach, which is capable of including the value of active management and strategic opportunities under uncertainty. This paper applies real options tech...

introduction: risk is an essential component in the production and sale of agricultural products. due to the nature of agricultural products, the people who act in this area including farmers and businesspersons encounter unpredictable fluctuations of prices. on the other hand, the firms that process agricultural products also face fluctuation of price of agricultural inputs. given that the can...

Designing a flexible system with real options is a method for managing uncertainty. This research introduces the concept of “complex” real options, which are composed of interconnected technological, organizational and process components. “Complex” real options differ from the “standard” real options described in the literature in the option life-cycle activities of design, evaluation and manag...

The real estate market of EU countries has undergone a severe global financial crisis 2008–2009, recovered successfully later, and now experiencing significant uncertainty due to the COVID-19 pandemic event. Significant volatility business is once again evident, just as it was following crisis. paper aims provide case study project by giving insight into Latvian that had been similar economic u...

At a recent conference on real options, a delegate from a telecommunications company raised the following query in response to a speaker from a firm of management consultants. Paraphrasing somewhat, he said: “You’ve stressed the importance of ‘holding the option’ and delaying investment decisions. Last month a consultant from your company advised my firm, a telecoms company, to act decisively, ...

Many start-up companies rely upon venture capitalists to begin operations. Typically, after the initial injection of funds, additional funding is provided as the firm reaches certain performance targets. The payment of the first funding round is comparable to an initial option premium. Further payments are contingent claims: the right but not the obligation to continue financially supporting th...

Real options theory suggests that managerial flexibility embedded within irreversible investments can account for a significant value in project valuation. Although the argument has become the dominant focus of capital investment theory over decades, yet recent survey literature in capital budgeting indicates that corporate practitioners still do not explicitly apply real options in investment ...