Record Details

VALUE MAXIMIZING DECISION BY THE USE OF A REAL OPTION ANALYSIS IN CURRENT ECONOMIC CLIMATE

Economics and Management

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Field Value
 
Title VALUE MAXIMIZING DECISION BY THE USE OF A REAL OPTION ANALYSIS IN CURRENT ECONOMIC CLIMATE
 
Creator Badūns, Edmunds; Riga International School of Economics and Business Administation
Čirjevskis, Andrejs; Riga International School of Economics and Business Administation
 
Subject Real Option Analysis; Monte Carlo Simulation; 3D Option Space; Risk Neutral Probability Based Analysis
 
Description Economic climate in which companies operating Latvia have to make sound capital-budgeting decisions can be noted as an archetypical example of decision-making under uncertainty. Real Options Analysis (ROA), though not applied consistently, is still well-renowned all over the globe, but apparently neglected by Latvian companies. There are few academic works on the topic, yet none of the major companies in the Latvia have publicized ROA application. Overall aim of the research is to carry out Real Options Analysis, thereby identifying value maximizing decisions regarding the Business Unit of the Latvian Company. Having used Monte Carlo simulation, 3D Option Space and sensitivity analysis – Risk-Neutral Probability-based real options analysis, authors provided a solution to the company’s problem at hand. The flow chart of ROA application has been created which would be a useful “road map” as well as valuation tool for Latvian practitioners in time of economic uncertainty.DOI: http://dx.doi.org/10.5755/j01.em.17.2.2167
 
Publisher Kaunas University of Technology
 
Contributor —
 
Date 2012-08-17
 
Type —
—
 
Format application/pdf
 
Identifier http://www.eejournal.ktu.lt/index.php/Ekv/article/view/2167
10.5755/j01.em.17.2.2167
 
Source ECONOMICS AND MANAGEMENT; Vol 17, No 2 (2012); 459-465
EKONOMIKA IR VADYBA; Vol 17, No 2 (2012); 459-465
 
Language en
 
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Copyright terms are indicated in the Republic of Lithuania Law on Copyright and Related Rights, Articles 4-37.