مجلة العلوم الاقتصادية والتسيير والعلوم التجارية
Volume 12, Numéro 1, Pages 656-668

Traditional Dcf Versus Real Option For Strategic Investment Decisions Valuation

Authors : Khiari Zahia .

Abstract

Abstract: In an economic environment characterized by rapid change and great uncertainty the static nature of the conventional net present value and discounted cash flow (DCF) method becomes inadequate to set up an effective investment strategy. This Paper tries to introduce the Real Options Approach as a novel means of evaluating investment decision and provides a good solution on the uncertain problems. Real options assume a dynamic series of future decisions where management has the flexibility to adapt given changes in the business. However, the complexity of the real option models makes them difficult to apply in real w orld.

Keywords

Keywords: Net Present Value, Real Options, Uncertainty, Flexibility, Investment valuation.