In order budget the capital, the approach of real options utilizes analysis that is based on options in order to appraise the real (as opposed to the financial) potential of endeavors. Supervisors can understand the dangers and benefits of the jobs and evaluate their chances by charting the options as a chain of events and decision points.
This study is an introductory note on real options and explains four primary groups, which are growth and follow-on abandonment choices, time and delay alternatives, choices, and options that introduce flexibility into creation. The expansion option is discussed in detail, including decision trees and sample calculations.
Publication Date: 08/12/2005
This is just an excerpt. This case is about Finance
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