Real Options in Capital Investment: Models, Strategies, and Applications (Hardcover)

~ Lenos Trigeorgis (Author) "Many academics and practicing managers recognize that the net present value (NPV) rule and other discounted cash flow (DCF) approaches to capital budgeting are inadequate..." (more)
Key Phrases: market utility function, venture growth options, gross project value, Phase One, Clean Air Act, Phase Two (more...)

Editorial Reviews

Book Description

A nation's culture and structure influence both the type and degree of innovation achievable within its society. Examines and discusses the latest developments in the valuation of capital investment opportunities.

Product Description

This compilation integrates various new contributions to the growing "real options" literature. Recent developments in the valuation of capital investment opportunities seen as real options (e.g. to defer, expand, abandon, or switch) have provided the tools and unlocked the possibilities to revolutionize the field of capital budgeting. The resulting insights, strategies, and techniques enable quantifying the thus far elusive elements of managerial operating flexibility and strategic interactions. These are vital to successfully capitalize on favorable future investment opportunities or limit losses from adverse market developments. This book presents various models and operating strategies, and a variety of applications ranging from acquisitions and divestitures, to natural resource development and pollution compliance. It is intended for both the academic and the professional market.

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Product Details

• Hardcover: 384 pages
• Publisher: Praeger (January 24, 1995)
• Language: English
• ISBN-10: 0275946169
• ISBN-13: 978-0275946166
• Product Dimensions: 9.6 x 6.4 x 1.2 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (1 customer review)
• Amazon.com Sales Rank: #2,328,849 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

27 of 28 people found the following review helpful:

4.0 out of 5 stars Advanced theoretical real options applications, January 5, 1997

By A Customer

The editor of this book, Lenos Trigeorgis, earned his Ph.D. from Harvard University, and has since that published several articles in distinguished journals on one of his favourite research subjects - real options. By using basic option pricing principles in capital investments, a practicing manager as well as an academic can develop financial models that handle stochastic information, for instance oil prices. The capital investment theories explained in this book is the greatest breakthrough in capital investments since the 60's. The widely accepted DCF-method should partly be replaced by Option Pricing Models, OPM, as this is the first method that can handle volatility and uncertainty in a theoretically consistent way. Several academics are finding this difficult to accept - the old "truth" doesn't hold is a volatile environment! If you believe in Discounted Cash Flow analysis - you MUST read this book! If you want to stay ahead of your competitors, you SHOULD read THIS comprehensive book on capital investments! It may require a lot more maths that any other books on the subject, as the book is rather theoretical with several real life examples. Most of the 20 authors have a background in maths as well as economics, something preferrable but not necessary for the reader of this excellent book. The book could be recommended for MBA and PhD students. Niklas Uddstrom ([e-mail])