General principles of application of the real options valuation in investment analysis

Vytvytska Uliana Yaroslavivna
Candidate of Economic Sciences, Associate Professor, Associate Professor of Department of Environmental Economics and Organization of Production,
Ivano-Frankivsk National Technical University of Oil and Gas, Ukraine

  • The article describes the general principles and proves the expediency of application of the real options valuation as an important tool for effective management decision making in investment analysis of projects. There are specified shortcomings of the discount method, which are particularly evident in conditions of uncertainty. The authors have studied the possibilities of using the Black-Scholes model for calculating the value of real options. There are also studied the application conditions of the real options valuation, their types, and there are analyzed the advantages and disadvantages of it; the scope of its practical application is substantiated too.
  • the real options valuation, the Black-Scholes model, investment projects, investment analysis, discount methods, uncertainty, management flexibility.
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  • Vytvytska U. Ya. General principles of application of the real options valuation in investment analysis [Internet source] / U. Ya. Vytvytska // Economic Processes Management: International Scientific E-Journal. – 2015. – № 2. – Access mode: http://epm.fem.sumdu.edu.ua/download/2015_2/2015_2_7.pdf