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Comparison of Real Options Analysis and Other Methods

Chapter
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Part of the SpringerBriefs in Finance book series (BRIEFSFINANCE)

Abstract

This chapter offers a comparison of the real options valuation approach, using the contingent claims approach, to two traditional valuation methods. The first traditional valuation approach discussed in this chapter is the NPV analysis, which also includes the contingent claims approach and the second is the decision tree analysis. Through this comparative study, it is shown when real options provide better results than traditional approaches. This will be illustrated on the basis of Copeland and Antikarov (2001) and these examples are further elaborated by the use of other literature.

Keywords

Cash Flow Real Option Risky Asset Call Option Contingent Claim 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Copeland T, Antikarov V (2001) Real options a practitioners guide. TEXERE, New York/LondonGoogle Scholar
  2. Schwartz ES, Trigeorgis L (eds) (2001) Real options and investment under uncertainty classical readings and recent contributions. The MIT Press, Cambridge/LondonGoogle Scholar
  3. Van Putten AB, MacMillan IC (2004) Making real options really work. Harv Bus Rev 82(12):134Google Scholar
  4. Wang A, Halal W (2010) Comparison of real asset valuation models: a literature review. Int J Bus Manage 5(5):14–24Google Scholar

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  1. 1.Applied EconomicsUniversity of AntwerpAntwerpBelgium

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