Volume 19, Numéro 2, Pages 7-26
Authors : Khiari Zahia .
This paper examines a novel/ new means of evaluating investment decisions. A technique that can provide a good solution for the uncertainty problem that traditional discounted cash-flows-based methods cannot solve. When the outcome of an investment is least certain, real options have the greatest potential analytic value. Real options assume a dynamic series of future decisions where management has the flexibility to adapt to changes in the business environment. However, the drawback of the real options models is their complexity which frequently makes them impossible to apply in real world situations.
Real options, traditional methods, investment decision, real options application
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