Provides a framework for assessing corporate investment projects as call options. Readers are sets pricing and basic investment appraisal rules with the basic option. Explains the motivation for looking at projects such as options, provides a mapping between a capital project and an option; shows how the option price, and examines the impact of these leaders approach to investment appraisal. Concludes with a discussion in the context of practical, analytical issues that arise with this metho … Read more »

Provides a framework for assessing corporate investment projects as call options. Readers are sets pricing and basic investment appraisal rules with the basic option. Explains the motivation for looking at projects such as options, provides a mapping between a capital project and an option; shows how the option price, and examines the impact of these leaders approach to investment appraisal. Concludes with a discussion in the context of practical, analytical issues that arise with this method.
«Hide

from
Timothy A. Luehrman
12 pages.
Publication Date: Nov 16, 1994. Prod #: 295074-PDF-ENG
Capital projects such as Real Options: An Introduction HBR case solution