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

To understand the recent trend towards the privatization of the infrastructure (eg airports), this paper proposes a methodology for evaluation based on real options and game theory analysis, which allows us to estimate when investors are overpaying for infrastructure assets, compared with the standard methods of discounted cash flow and, as a premium is justified for their flexibility and strategic options of growth. While some acquisitions of infrastructure assets may include financial transactions, the value of which is in first place on their expected cash flows, many of these investments in infrastructure and provide a platform to create a strategic context within which the firm can grow. "Hide
by Lenos Trigeorgis, Han TJ Smit Source: California Management Review 23 pages. Publication Date: February 1, 2009. Prod. #: CMR419-PDF-ENG

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