The determinant of production entry and exit model on financing behavior

Tyrone Lin ()

European Journal of Operational Research, 2009, vol. 196, issue 1, 258-265

Abstract: This study seeks for equity/debt values and the relevant potential firm value with financing or not when the real options approach is assessed. The paper deals with the following relative problems: (1) the assessment rule of decision whether to stop production or not; (2) whether the (dis) investment cost or salvage could reflect the production scale; (3) whether the rate of capital cost or the rate of return in different stages could reflect the suitable risk premium; (4) when the investment cost, exit cost, and salvage are the linear functions of production volume and follow the geometric Brownian motion to analyze the optimum external financing behavior and to decide the production thresholds of production entry and exit.

Keywords: Financing; Investment; analysis; Entry/exit; Decision-making; Real; options (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377-2217(08)00264-6
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:196:y:2009:i:1:p:258-265

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().