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An opportunity cost model to value deferral options
- Kim, G.;
- Miller, L.;
- Baek, J.W.
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0초록
This study discusses a real options valuation approach based on the familiar opportunity cost concept. After demonstrating the equivalence of the opportunity model to the binomial lattice approach of Cox, Ross, and Rubinstein (CRR), we discuss its attributes through simple numerical examples. In contrast to the CRR approach, the transparency of the opportunity model provides an intuitive and economical baseline for managerial discussions and decision-making. We focus on the opportunity costs inherently embedded in the real options value (ROV); therefore, our study is distinct from most other studies, which consider them as the exogenous input to the ROV. © 2024 Institute of Industrial & Systems Engineers.
키워드
Binomial Lattices; Cost Models; Decisions Makings; Deferral Option; Exogenous Input; Lattice Approaches; Opportunity Costs; Real Option Values; Real Options Valuation Approach; Simple++; Decision Making
- 제목
- An opportunity cost model to value deferral options
- 저자
- Kim, G.; Miller, L.; Baek, J.W.
- 발행일
- 2024-04
- 유형
- Article
- 권
- 69
- 호
- 2
- 페이지
- 88 ~ 107