A study on estimating investment timing of real options.: An article from: Engineering Economist

This digital document is an article from Engineering Economist, published by Institute of Industrial Engineers, Inc. (IIE) on July 1, 2008. The length of the article is 8814 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.

From the author: One of the most critical issues in real options analysis is determining the optimal timing of the irreversible investment during the life of the option. Research indicates that failing to exercise real options on time reduces the project's value much less than predicted. However, the question of whether real option holders exercise their options optimally has not been extensively researched. In this research, an early decision rule for real options is developed, and a simulation technique validates this rule. The result of the simulation indicates that the suggested decision rule gives higher profits than the traditional rule in most cases.

Citation Details
Title: A study on estimating investment timing of real options.
Author: Hyun J. Han
Publication:Engineering Economist (Magazine/Journal)
Date: July 1, 2008
Publisher: Institute of Industrial Engineers, Inc. (IIE)
Volume: 53 Issue: 3 Page: 197(33)

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