scholarly journals The Project Valuation with Abandonment and Reset Investment Proportion Applying Real Option Method

2014 ◽  
Vol 04 (05) ◽  
pp. 309-317 ◽  
Author(s):  
Yi-Long Hsiao ◽  
Li-Ling Chen
Keyword(s):  
Real Option ◽  
Project Valuation ◽  
Real Option Method

scholarly journals Penerapan Real Option Analysis dengan Perubahan Volatilitas dalam Menentukan Nilai Proyek Pertambangan

2017 ◽  
Author(s):  
Novriana Sumarti
Keyword(s):  
Real Option ◽  
Lattice Method ◽  
Market Conditions ◽  
Real Option Analysis ◽  
Project Valuation ◽  
Valuation Method ◽  
Valuation Process ◽  
Silver Mining ◽  
Option Model ◽  
Real Option Method

Author: Dean Andrean, Rio Nur Arifin, Novriana Sumarti AbstrakDalam menghadapi kondisi pasar yang tidak menentu, sebuah perusahaan memerlukan se- buah proses evaluasi nilai proyek yang dapat mengikutsertakan ketidakpastian yang timbul oleh kondisi pasar tersebut, agar perusahaan dapat memaksimalkan keuntungan dan mem- batasi kerugian yang mungkin timbul. Metode Real Option merupakan metode valuasi proyek yang dapat mengandung unsur ketidakpastian dan juga strategi investasi perusahaan pada proyek yang akan dijalankan. Ketidakpastian ini ditandai dengan adanya perubahan nilai proyek dari waktu ke waktu, dimana dalam makalah ini akan dimodelkan oleh Metode Lattice. Salah satu parameter yang diperlukan dalam metode ini adalah volatilitas yang menunjukkan cukup atau kurangnya informasi yang dimiliki mengenai perkembangan nilai proyek tersebut di masa yang akan datang. Makalah ini membahas tentang Real Option menggunakan model trinomial lattice yang dimodifikasi dengan perubahan volatilitas ber- dasarkan Haahtela. Model Real Option dengan perubahan volatilitas tersebut diterapkan pada masalah valuasi nilai proyek pertambangan perak. Hasil analisis menunjukkan nilai proyek yang positif sehingga proyek ini akan menguntungkan untuk dijalankan.Kata kunci: Evaluasi Nilai Proyek, Metode Lattice, Metode Trinomial, Real Option AbstractIn facing uncertain market conditions, a company needs a project value valuation process that may involve uncertainty arising from such market conditions, in order for the company to maximize profits and limit losses that may arise. Real Option method is a method of val- uation of projects that can contain elements of uncertainty and also the company's invest- ment strategy on the project to be run. This uncertainty is marked by the change of project’s value from time to time, which in this paper will be modeled by the lattice Method. One of the parameters required in this method is the volatility indicating sufficient or insufficient information about the development of the project’s value in the future. This paper discusses Real Option using modified trinomial lattice model with volatility changes based on Haahtela. The Real Option model with such volatility changes is applied to the valuation of the value of the silver mining project. The result show positive value of this project so the project is worthed to run.Keywords: Project Valuation Method, Method Lattice, Method Trinomial, Real Option

Research on the Real Options in Investment Decision of Waterway Infrastructure Construction

2013 ◽  
Vol 734-737 ◽  
pp. 1617-1620
Author(s):  
Wei Jin
Keyword(s):  
Real Options ◽  
Carbon Dioxide Emissions ◽  
Capital Investment ◽  
Real Option ◽  
Investment Decision ◽  
Energy Utilization ◽  
Real Options Theory ◽  
The Real ◽  
The Government ◽  
Real Option Method

Developing the waterway infrastructure construction can improve the efficiency of energy utilization, reduce the energy consumption intensity and carbon dioxide emissions. Till the year 2020, China plan to complete 19,000 kilometers high grade channel. Construction of water infrastructure construction requires a large capital investment. However, the main financial source of funding the construction of transportation infrastructure at present in China is special financial allocation of the government. The unitary financing structure as well as the funding pressure has leaded to some serious financing problems. This paper applied the real options theory to the waterway infrastructure construction financing, analyzed the limitations of the NPV method and the advantages of real option method in investment decision of waterway infrastructure construction, and took an example to show its feasibility.

Real Option Methodology for the Evaluation of IT Projects

2007 ◽  
Vol 8 (1) ◽  
pp. 71-88
Author(s):  
Efthymios Papadopoulos ◽  
Georgios Dounias
Keyword(s):  
Real Option ◽  
Net Present Value ◽  
New Technology ◽  
Full Range ◽  
Present Value ◽  
It Projects ◽  
Innovative Strategy ◽  
Technology Deployment ◽  
Project Valuation ◽  
Project Risks

Current project valuation framework under the Net Present Value (NPV) method has been proved to be incomplete, as it fails to accurately account for uncertainty. Traditional financial tools fail because they neglect to account for the value of flexibility. The standard NPV approach assumes that project risks remain constant over the life of the strategy. It, also, fails to factor in the full range of opportunities that a new and innovative strategy may create for a firm in the future. We show how one can use Real Option methodology in order to determine optimal financial path to fund new technology deployment within a risky environment. Moreover, in this paper we demonstrate, with the use of a simple numerical example, how the Real Options methodology can be implemented within an IT project deployment.

Valuation of a Troubled Firm: A Case Study on Jet Airways

2014 ◽  
Vol 1 (2) ◽  
Author(s):  
Anjala Kalsie
Keyword(s):  
Real Option ◽  
Market Price ◽  
Discounted Cash Flow ◽  
Book Value ◽  
The Real ◽  
Real Option Approach ◽  
Indian Firm ◽  
Real Option Method ◽  
Discounted Cash Flow Method

The objective in the paper is to value a firm in distress which is struggling to survive and continue its operations, unable to meet its debt obligations, and making losses so that it has a negative book value. The paper has taken a listed Indian firm which is in operation since a decade called Jet Airways. The paper looks at different methods to value this company, the most prominent being the real option approach to valuation. Finally, a comparison of different valuation methods was done with the real company price. The Discounted Cash Flow method tends to overvalue the price of a distressed firm. Real option method gives us a much smaller intrinsic price which is even close to the market price of the share.

scholarly journals An Assessment of Wind Farm Construction Efficiency Using the Real Option Method

2016 ◽  
Vol 16 (2) ◽  
pp. 84-102
Author(s):  
Tomasz Łukaszewski ◽  
Wojciech Głoćko
Keyword(s):  
Wind Farm ◽  
Real Option ◽  
Investment Decision ◽  
Investment Project ◽  
Point Of View ◽  
Practical Application ◽  
Real Option Method ◽  
Construction Efficiency ◽  
Selection Of ◽  
Made In

Abstract From a developer’s point of view the construction of a wind farm in Poland is an investment project assessed in terms of economic efficiency. This paper discusses the selection of methods to be used for the assessment of such investments: it proposes to consider wind farm construction as an option and price it using models developed for the financial market. The purpose of the paper is to present a practical application of the option pricing method to the assessment of wind farm construction efficiency, in particular to compare the option and discount methods. Calculations are based with the example of an actual wind farm completed by one of the authors. The values of the project are different depending on the chosen method of estimation. The pricing carried out using the options method will lend legitimacy to the DCF result or suggest the verification of its correctness and review of the assumptions made. In both cases the application of the options method will have an advantageous impact on the investment decision.

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