Abstract

TAMARA AYUS, Armando Lenin  and  ARISTIZABAL VELASQUEZ, Raúl Enrique. Real options as an alternative methodology to assess investment projects. ecos.econ. [online]. 2012, vol.16, n.35, pp.29-44. ISSN 1657-4206.

This paper aims to broaden the applicability of the assessment methodology of investment projects through real options as a key element for investment decision making. Traditional project valuation methodologies are described and their gaps, which special characteristic is uncertainty, are presented. A parallel between financial and real options that could be used for valuation is made, using the binomial tree method. Finally, a case study in the construction sector shows a project valuation using expand and waiting options.

Keywords : Real Options; Financial Options; Binomial Trees.

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