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Real Options

  • John B. GuerardJr.
  • Anureet Saxena
  • Mustafa Gultekin
Chapter
  • 7 Downloads

Abstract

Chapter “Investing in Assets: Theory of Investment Decision-Making” dealt with the capital budgeting process in which a financial manager accepts a project only if the discounted cash flow of that project exceeds the initial costs of the project. The discount rate is the cost of capital. The difference between the discounted cash flow and the initial cash outlay is the net present value, NPV, which should be positive to accept a project. This chapter discusses another application of cash flow and valuation, the application of real option theory.

References

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  3. McDonald, R. L. (2003). Derivatives markets. Boston: Pearson/Addison Wesley.Google Scholar
  4. Mitchell, G. R., & Hamilton, W. F. (1988). Managing R&D as a strategic option. Research-Technology Management, 31, 15–22.CrossRefGoogle Scholar
  5. Van Horne, J. C. (2002). Financial management and policy (12th ed.). Upper Saddle Rive, NJ: Prentice-Hall. Chapter 7.Google Scholar

Copyright information

© Springer Nature Switzerland AG 2021

Authors and Affiliations

  • John B. GuerardJr.
    • 1
  • Anureet Saxena
    • 2
  • Mustafa Gultekin
    • 3
  1. 1.McKinley Capital Management, LLCAnchorageUSA
  2. 2.McKinley Capital Management, LLCStamfordUSA
  3. 3.Kenan-Flagler Business SchoolUniversity of North Carolina Chapel HillChapel HillUSA

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