Valuing Infrastructure Investment: An Option Games Approach Harvard Case Solution & Analysis

To comprehend the recent trend toward privatization of infrastructure assets (e.g., airports), this article proposes a valuation methodology based on real options and game theory evaluation that empowers evaluating when investors might overpay for infrastructure assets over standard discounted cash flow techniques and when a premium is warranted for their managing flexibility or strategic growth option value.

Many of these infrastructure investments provide a platform and create the strategic context within which the business can grow, while some infrastructure asset acquisitions may entail financial transactions whose value derives chiefly from their anticipated cash flows.

Valuing Infrastructure Investment An Option Games Approach Case Study Solution

PUBLICATION DATE: February 01, 2009 PRODUCT #: CMR419-HCB-ENG

This is just an excerpt. This case is about STRATEGY & EXECUTION

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