scholarly journals EVALUATION OF INNOVATIVE AGRICULTURAL EXTENSION PROJECTS USING NOVEL INVESTMENT TOOLS / INOVACINIŲ ŽEMĖS ŪKIO PLĖTROS PROJEKTŲ VERTINIMAS NAUJOMIS INVESTICINĖMIS PRIEMONĖMIS

2010 ◽  
Vol 16 (4) ◽  
pp. 703-716 ◽  
Author(s):  
Anastasios Michailidis ◽  
Fotios Chatzitheodoridis ◽  
George Theodosiou
Keyword(s):  
Real Options ◽  
Information And Communication Technologies ◽  
Net Present Value ◽  
Agricultural Extension ◽  
Present Value ◽  
Real Options Approach ◽  
Drastic Increase ◽  
Information And Communication ◽  
Agricultural Areas ◽  
Options Value

This article extends the employment of novel investment evaluation tools into agricultural extension issues. In particular the concept of real options methodology has modulated, into an innovative agricultural project called “wema”, to model design flexibility in the realistically uncertain environment of information and communication technologies (ICT). Taking into account the great importance of ICTs, as the principal driver of change in agricultural areas, as well as the drastic increase in ICTs adoption over the last decade, a study evaluating the adoption parameters of ICTs can prove significantly valuable. Besides, any issue related to ICTs is extremely interesting and it belongs to the modern subject‐matters of the agricultural economics science. Empirical results revealed that, according to the traditional criterion (Net Present Value), the implementation plan of the “wema” project is feasible. However, assuming the presence of uncertainty, application of a real options approach demonstrates that the Net Present Value may lead stakeholders to faulty decisions, as the innovative plan is rejected. The results indicate that the options have a significant value and highlight the fact that ignoring options value process can lead to a significant error. This obviously indicates the importance of combining the Net Present Value criterion in agricultural extension investments with the real options approach. Santrauka Straipsnyje aprašomos naujos investavimo į žemes ūkio plėtrą vertinimo priemonės. Sukurta realių alternatyvų metodologija, kuri pritaikyta inovatyviame “Wema” žemes ūkio projekte. Empiriniai rezultatai atskleidė, kad pagal tradicinį kriterijų – grynąją dabartine verte – “Wema” projektą įgyvendinti įmanoma. Tačiau projekto dalyviai, šiuo metodu vertindami neapibrežtumus, gali priimti klaidingą sprendimą ir projektą atmesti. Tai akivaizdžiai rodo, kad vertinant žemes ūkio pletros projektus, grynosios dabartines vertės kriterijų reikia derinti su realių alternatyvų metodologija.

Business valuation strategy for new hydroponic farm development – a proposal towards sustainable agriculture development in United Arab Emirates

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gyanendra Singh Sisodia ◽  
Raweya Alshamsi ◽  
Bruno S. Sergi
Keyword(s):  
Food Security ◽  
Real Options ◽  
United Arab Emirates ◽  
Net Present Value ◽  
Good Health ◽  
Social Implications ◽  
Present Value ◽  
Content Type ◽  
Real Options Approach ◽  
Fresh Vegetables

PurposeThis study aims to evaluate a hydroponic farm (through nutrient film technique) while considering uncertainty, sustainability and the system's utility in the dominant desert geography. The idea of the hydroponic farm is to allow individuals/businesses to grow plants. Given the geographical condition, the hydroponic system may be useful in the Gulf context and may lead to food security and sustainability. Additionally, the UAE government has initiated several support schemes that can be availed for investing in such businesses that can contribute to the nation's food security.Design/methodology/approachThe hydroponic farm is evaluated using the net present value and real options approach. The authors studied five scenarios: 1. business as usual, 2. 50% subsidy on initial investment through Khalifa funding, 3. 4% premium, 4. Subsidy plus premium and 5. solar panel installation with bore well.FindingsAs per the assumptions and data usage, all the scenarios shows a positive net present value (NPV); Nevertheless, scenarios 4 and 5 report the significant highest net present and delay value.Research limitations/implicationsThis study has environmental, economic and social implications. Lower imports indirectly lead to lower carbon footprints. The local production of food ensures higher employability in the sector and increase in local consumption. Additionally, fresh food consumption is directly associated to good health.Practical implicationsSupportive policies such as subsidies through Khalifa funding may accelerate the expansion of such projects through domestic and foreign investments. One of the important takeaway from the study is to invest in the training of the workforce.Social implicationsGiven the geographical condition, the UAE usually depends on food imports. If the hydroponic farms become popular, the residents will have access to fresh vegetables and fruits. Higher engagement in agriculture activities also ensures a significant increase in agriculture-related businesses and higher employability.Originality/valueThe study adds novelty to the literature because the effect of Khalifa funding and investment analysis on solar (wells) has not been evaluated in any hydroponic studies. We presented the results with tornado graphs using NPV risk and real options approach in the Gulf context. The study represents functional scenarios that were previously not found in the literature.

scholarly journals A Real Options Approach to Valuate Solar Energy Investment with Public Authority Incentives: The Italian Case

Energies ◽  
2020 ◽  
Vol 13 (16) ◽  
pp. 4181
Author(s):  
Antonio Di Bari
Keyword(s):  
Solar Energy ◽  
Real Options ◽  
Real Option ◽  
Net Present Value ◽  
Option Value ◽  
Present Value ◽  
Energy Investment ◽  
The Real ◽  
Real Options Approach ◽  
Real Option Value

Solar energy investment represents currently a valid reason to support sustainable economic development. In fact, over the last few years, governments have applied different measures to incentivize private consumers and firms to use renewable energies. Photovoltaic (PV) projects are characterized by uncertainty due to meteorological conditions, the unpredictable behavior of government, and managerial flexibility. Since the Net Present Value (NPV) approach is not able to capture these uncertain factors, it was replaced with the Real Options Approach (ROA). The latter method manages to embed flexibility in PV investment using binomial trees. This paper valuates PV investment in all regional areas in Italy using an integrated approach between the discounted cash flows method and real option value, called Expanded Net Present Value (ENPV). We fit the probability of tax benefits into a binomial lattice model after analyzing the geographical position and weather conditions of all regional capitals of Italy. The results show that the cities with high irradiance/temperature have positive NPV and high investment values. On the other hand, while most cities have negative NPV, the inclusion of the flexibility in investment decisions gives additional value to the project, making the ENPV positive and implying an attractive investment opportunity with the possibility of delaying the project. We also propose a sensitivity analysis that shows how the real option value changes when incentive policies of the government become more attractive. This paper contributes to the existing literature in the way of considering financial, meteorological/geographical, and political factors to valuate PV investment.

APPLYING REAL OPTIONS AND THE MAXIMUM NPV RULE TO MARKET ENTRY/EXIT STRATEGIES

2005 ◽  
Vol 22 (01) ◽  
pp. 71-83 ◽  
Author(s):  
TYRONE T. LIN ◽  
TUNG-LI SHIH
Keyword(s):  
Decision Making ◽  
Growth Factors ◽  
Real Options ◽  
Market Entry ◽  
Net Present Value ◽  
Cash Flows ◽  
Present Value ◽  
The Real ◽  
Real Options Approach ◽  
Complex Calculation

This study applies the real options approach to examine the maximum net present value of the market entry/exit thresholds given uncertain cash flows. The discount and growth factors are determined in the proposed entry/exit models, facilitating the complex calculation of the discount and growth rates to determine the present value of cash flow streams. Accordingly, this work successfully combines the maximum net present value method and the real options approach for decision-making by simply considering the discount and growth factors.

scholarly journals Ethanol plant investment using net present value and real options analyses

2009 ◽  
Vol 33 (10) ◽  
pp. 1442-1451 ◽  
Author(s):  
Todd M. Schmit ◽  
Jianchuan Luo ◽  
Loren W. Tauer
Keyword(s):  
Real Options ◽  
Net Present Value ◽  
Present Value ◽  
Ethanol Plant

scholarly journals Valuations and Decisions of Investing in Corporate Social Responsibility: A Real Options Viewpoint

2018 ◽  
Vol 10 (10) ◽  
pp. 3532 ◽  
Author(s):  
Kuo-Jung Lee
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Real Options ◽  
Optimal Strategies ◽  
Optimal Timing ◽  
Valuation Model ◽  
Real Options Approach ◽  
Corporate Social ◽  
Options Value

Corporate social responsibility (CSR) implementation could raise corporate reputations and benefit long-term development. Studying the effects of CRS on corporate valuation is essential. However, studies on the valuation of CSR are limited, particularly studies involving a dynamic model for valuing CSR. This study applies a real options approach to derive the company valuation of CSR investments, CSR options value, and the optimal timing for implementing CSR. This study elucidates the value of CSR and the decision to invest in CSR. Specifically, the value of CSR options facilitates determining whether to invest in CSR, and the optimal threshold for implementing CSR indicates explicitly when to invest in CSR. In addition, numerical analyses and results are demonstrated to verify the established model. This is the first and novel attempt to consider the valuation model and optimal strategies of CSR investments using the methods of real options.

ICT Investments and Management for Organizations

2014 ◽  
pp. 544-560
Author(s):  
Georgios N. Angelou ◽  
Anastasios A. Economides
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Information And Communication Technologies ◽  
Business Strategy ◽  
Communication Technologies ◽  
Qualitative Modeling ◽  
Balance Scorecard ◽  
Cost Benefits ◽  
Information And Communication ◽  
Decision Making Model

Developing the Information and Communication Technologies (ICT) strategy that supports the overall organization's business strategy is critical for generating business value. Recognizing the inadequacy of traditional quantitative cost-benefits analysis for evaluating and managing ICT investments, researchers suggest multi-criteria analysis, integrating quantitative and qualitative modeling. This chapter introduces the Balance Scorecard (BS) decision analysis framework and combines it with Real Options (ROs) analysis, in a qualitative and quantitative perspective, for modeling the business flexibility as well as for evaluating and controlling the ICT investments strategy. The multi-criteria ROs modeling applies to all perspectives of the BS framework providing a holistic decision-making model for ICT business.

E-Learning Business Risk Management with Real Options

2011 ◽  
pp. 187-212
Author(s):  
Georgios N. Angelou
Keyword(s):  
Risk Management ◽  
Real Options ◽  
Information And Communication Technologies ◽  
Risk Mitigation ◽  
A Priori ◽  
Senior Managers ◽  
Investment Performance ◽  
Multiple Risks ◽  
Information And Communication ◽  
E Learning

E-learning markets have been expanding very rapidly. As a result, the involved senior managers are increasingly being confronted with the need to make significant investment decisions related to the elearning business activities. Real options applications to risk management and investment evaluation of Information and Communication Technologies (ICT) have mainly focused on a single and a-priori known option. However, these options are not inherent in any ICT investment. Actually, they must be carefully planned and intentionally embedded in the ICT investment in order to mitigate its risks and increase its return. Moreover, when an ICT investment involves multiple risks, by adopting different series of cascading options we may achieve risk mitigation and enhance investment performance. In this paper, we apply real options to the e-learning investments evaluation. Given the investment’s requirements, assumptions and risks, the goal is to maximize the investment’s value by identifying a good way to structure it using carefully chosen real options.

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