Real options approach to capital budgeting used options on the basis of the analysis to assess the real (as opposed to financial) potential projects. According to the schedule settings in a series of decision points, and events managers can understand the risks and benefits associated with the project, and to more fully evaluate. This note presents a real options approach and describes the four main categories: the expansion and future options, terms and options delays, failure options and parameters, to provide flexibility in production. Expansion options are discussed in detail, including samples of the calculations and decision trees. "Hide
by Walid Busaba, Zeigham Khokher, Jackie Grimshaw 8 pages. Publication Date: August 12, 2005. Prod. #: 905N15-PDF-ENG
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