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Irreversibilidad e incertidumbre de las decisiones financieras en i&d

Irreversibility and uncertainty of the financial investments on r&d

Martin Ezequiel Masci

MPRA Paper from University Library of Munich, Germany

Abstract: The traditional methods for the valuation of investments are based on the possibility of calculating discount cash flows. The present paper analyses the problem associated to investments on innovative products, which require an important demand of R&D. The mentioned investments present irreversibility, flexibility and uncertainty characteristics. Therefore, it is proposed the Real Options methodology. To carry it out, investigations processes and their relationship with the financial market are described, with the aim of dealing with the irreversibility and the possibilities of making flexible a project. Finally, the different valuation methods are reviewed, focusing on the Black & Scholes formula to consider the options to wait, abandon, expand and suspend. It is necessary to take into account that the mentioned criteria does not replace the traditional valuation methods (especially NPV), but it should be incorporated to them, to appropriately treat the current context.

Keywords: Research and Development; Real Options; uncertainty; Black & Scholes (search for similar items in EconPapers)
JEL-codes: D53 D81 O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino
Date: 2012-06-30
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