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Improving Investment Decision-Making by Expanding Key Knowledge with Real Option Tools

Francisco Alcaraz Garcia, Markku Heikkilä, Improving Investment Decision-Making by Expanding Key Knowledge with Real Option Tools. Journal of Decision Systems 12 (3-4), 345–368 , 2003.

Abstract:

Assessment of investment profitability with discounted cash flows has proven insufficient when industry structures change. Managers need an extended flexibility in decision­ making that DCF analyzes cannot offer. Real Option valuation as a method for improving flexibility in investment decisions has been widely researched but less used in business. With good support tools it is possible for managers to cross the threshold to Real Option methods and thinking. Real Option spreadsheet tools support both decision­making processes and business learning. They utilize the flexibility that new key knowledge brings to volatile industry situations and lead to better investment decisions.

BibTeX entry:

@ARTICLE{jAlHe03a,
  title = {Improving Investment Decision-Making by Expanding Key Knowledge with Real Option Tools},
  author = {Alcaraz Garcia, Francisco and Heikkilä, Markku},
  journal = {Journal of Decision Systems},
  volume = {12 },
  number = {3-4},
  pages = {345–368 },
  year = {2003},
  keywords = {Flexibility in investment, Real Option tools, DSS},
}

Belongs to TUCS Research Unit(s): Institute for Advanced Management Systems Research (IAMSR)

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