Abstract
In this paper we provide an approach to evaluate corporate real estate under uncertainty. When the decision maker is faced with an uncertain data situation the determination of a calendar cut replacement time is no longer possible. In that case, a preference-free assessment of the consequences of uncertainty, using stochastic processes, can be a decision aid. The fact that a decision maker can postpone an investment decision gives him more flexibility and the opportunity to gain certainty about the data that have been uncertain so far. Though there is no doubt about the advantages of the real option approach in comparison to the classical methods of evaluating investments the results show that the decision-maker has to be aware of the very restrictive assumptions of this approach. Therefore the decision-maker has to examine very carefully for each specific decision-situation in reality whether those assumptions are met or not.
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Pfnür, A., Schaefer, C. (2001). Evaluating Corporate Real Estate with Real Options. In: Fleischmann, B., Lasch, R., Derigs, U., Domschke, W., Rieder, U. (eds) Operations Research Proceedings. Operations Research Proceedings, vol 2000. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-56656-1_29
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DOI: https://doi.org/10.1007/978-3-642-56656-1_29
Publisher Name: Springer, Berlin, Heidelberg
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