Real-Option Valuation for Strategic Projects
Seed: project_cashflows, volatility_estimates, project_phases, exercise_costsADVERTISEMENT - IN-ARTICLE
Implementation Guide
A real-options framework that values managerial flexibility (defer, expand, abandon) embedded in strategic projects using option-pricing or binomial models, supporting capex committees by quantifying the value of staged investment under uncertainty.
💡 Expert Q&A Insights
Q: When to use real options?
For projects with staged decisions and high uncertainty.
Q: How to estimate volatility?
Use comparable project returns or proxy market volatilities.