Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
482795 | European Journal of Operational Research | 2008 | 12 Pages |
Abstract
This paper suggests a valuation framework for an investment project through the concept of real options. Generally, in real asset world, decision time and its payment time are not identical. This so-called investment lag problem should be considered when valuing real assets. When investment lags exist, firms’ accommodation capacities play important roles. In this paper, the real effect of investment lag on investment value is tested upon various conditions. We show the valuation process of real assets under the risk-neutral world. The closed-form formula is also provided for valuing real assets, including R&D project.
Keywords
Related Topics
Physical Sciences and Engineering
Computer Science
Computer Science (General)
Authors
Ki Hong Kim, Seong Tae Hwang, Hyung Sik Oh, Deok Joo Lee,