Real Options
Real options valuation, also often termed real options analysis,Adam Borison (Stanford University)''Real Options Analysis: Where are the Emperor's Clothes?'' (ROV or ROA) applies option (finance), option Valuation of options, valuation techniques to capital budgeting decisions.Campbell, R. Harvey''Identifying real options'' Duke University, 2002. A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a Project#Corporate_finance, capital investment project. For example, real options valuation could examine the opportunity to invest in the expansion of a firm's factory and the alternative option to sell the factory.Nijssen, E. (2014)''Entrepreneurial Marketing; an effectual approach. Chapter 2'' Routelegde, 2014. Real options are most valuable when uncertainty is high; management has significant flexibility to change the course of the project in a favorable direction a ...
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