Financial Management

Case Studies
On Real Option

Reference Heading in-person Heading
Title: Case studies on Real Option
Name:
informant: Angelien G.Z. Kemna Date Submitted:
Source: Course:
Article Word seem:

Introduction

The ability of natural selection pricing theory to quantify tractableness in strategic investment projects makes it a very challenge choice. This is because of the fact that flexibility is not explicitly weighn into key by standard DCF (Discounted Cash Flow method).



Real option is better than DCF method because of the reason that DCF method does not take into account the time value of money.

Summary

To summarize with the article, lets start with the provision of the capital bud pounding decision, taken to adapt the existing and develop novel techniques for strategic decision making. The paper has discussed three cases in the summon of timing option in an offshore project, Section 2 discusses about the growth or sequential case and utmost(a) the adornment decision of a refinery production unit.
Section 4 describes the key steps of the decision making process.
Lets start with the Timing Option, it deals with the line typically related to the offshore oil and gas industry. It has been modify substantially; it is because of the reason that it shows the difference between OPT and the DCF model. With the conclusion of the exploration time, the oil company has three possible strategies presumptuous that no addition information is required to obtain more accurate estimate of the volume of the reserves. This can decide the following: 1(1). Not to develop and thus to return the field...If you want to get a full essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .