How Options Analysis Can Enhance Managerial Performance

Lars Andersen

European Management Journal, 2002, vol. 20, issue 5, 505-511

Abstract: Discounted cash flow analysis is the most common method for valuing projects in a company, but an increasing number of practitioners are now using options methodology to get a truer picture of the real value of a project. This article covers the discounted cash flow methodology, and how this tool fails to fully capture flexibility and uncertainty. After a short overview of financial options, the article covers the main principles behind options valuation of projects.

Keywords: Options; Real; options; Valuation; DCF; Discounted; cash; flow; Discount; rates; Flexibility; Decision-making (search for similar items in EconPapers)
Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0263237302000932
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:eurman:v:20:y:2002:i:5:p:505-511

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/115/bibliographic
http://www.elsevier. ... me/115/bibliographic

Access Statistics for this article

European Management Journal is currently edited by Michael Haenlein

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