Project Valuation Using Real Options (Paperback)

Book Summary of Project Valuation Using Real Options
Business leaders are frequently faced with investment decisions on new and ongoing projects. The challenge lies in deciding what projects to choose, expand, contract, defer, or abandon, and which method of valuation to use is the key tool in the process. This title presents a step-by-step, practical approach to real options valuation to make it easily understandable by practitioners as well as senior management. This systematic approach to project valuation helps you minimize upfront investment risks, exercise flexibility in decision making, and maximize the returns. Whereas the traditional decision tools such as discounted cash flow/net present value (DCF/NPV) analysis assume a fixed path ahead, real options analysis offers more flexible strategies. Considered one of the greatest innovations of modern finance, the real options approach is based on Nobel-prize winning work by three MIT economists, Fischer Black, Robert Merton, and Myron Scholes.

Key Feature
• Explains why traditional valuation methods such as DCF/NPV and decision tree analyses are no longer effective in todays uncertain world
• Walks you through each step of using real options to value projects regardless of the readers beginning financial knowledge
• Presents multiple scenarios and examples that show the true value of using real options
• Shows you how to achieve strategic alignment of projects, increase project flexibility and sustain competitive advantage.

Table of Contents
1. Introduction
2. Traditional Project Valuation Tools
3. Challenges with Traditional Tools
4. Real Options: The New Tool
5. ROA Calculation
6. ROA Application
7. Simple Options
8. Advanced Options
9. Real Options in Real World