Using an options approach to evaluate Korean information technology infrastructure.: An article from: Engineering Economist

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From the author: This article presents a practical case application of the real options framework that addresses a multi-stage investment decision in Korean information technology infrastructure. Traditional net present value and Monte Carlo simulation are initially performed to ascertain a range of project values. The investment scenario is then viewed from a growth and compound options perspective in order to explicitly account for the project's irreversible capital expenditures, managerial flexibility, and uncertainty. Appropriate sensitivity analyses and discussion for each real options framework provide guidelines for improved decision-making. In general, it is shown that the real options approach identifies value overlooked by discounted cash flow techniques.

Citation Details
Title: Using an options approach to evaluate Korean information technology infrastructure.
Author: Luke Miller
Publication:Engineering Economist (Magazine/Journal)
Date: September 22, 2004
Publisher: Thomson Gale
Volume: 49 Issue: 3 Page: 199(21)

Distributed by Thomson Gale