A Real-World Way to Manage Real Options  

Oleh:

Copeland, Tom ; Tufano, Peter

Jenis: Article from Bulletin/Magazine - ilmiah internasional
Dalam koleksi: Harvard Business Review bisa di lihat di link (http://web.b.ebscohost.com/ehost/command/detail?sid=f227f0b4-7315-44a4-a7f7-a7cd8cbad80b%40sessionmgr114&vid=12&hid=105&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&jid=HBR) vol. 82 no. 3 (Mar. 2004), page 90.
Topik: OPTIONS; decision analysis; decision trees; financial analysis; growth management; investments; options

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Perpustakaan Pusat (Semanggi) Nomor Panggil: HH10.24 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Each corporate growth project is an option in the sense that managers face choices - push ahead or pull back - along the way. Yet, many companies hesitate to apply options theory to initiatives such as R & D and geographic expansion, partly because these "real" options are highly complex. In this article, the authors make the case that the complexity of real options can be eased through the use of a binomial valuation model. Many of the problems with real - options analysis stem from the use of the Black - Scholes - Merton model, which isn't suited to real options. Binomial models, by contrast, are simpler mathematically, and you can tinker with a binomial model until it closely reflects the project you wish to value. Suppose your company is considering investing in a new plant. To use the binomial model, you must create an "event tree" to figure out the full range of possible values for the plant during the project's lifetime. Then you work backward from the value at completion, factoring in the various investments, to determine the value of the project today. These calculations provide you with numbers for all possible future values of the option at the various points where a decision needs to be made on whether to continue with the project. The authors also address another criticism of real options : that gaps often arise between theoretical and realized values of options of all types. Such gaps may be largely the result of managers exercising options at the wrong time. Looking for trigger points that correspond to the nodes on a binomial decision tree should not only tell managers when they need to decide on exercise, but also specify rules governing the exercise decisions.

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