A real-world way to manage real options.

@article{Copeland2004ARW,
  title={A real-world way to manage real options.},
  author={Tom Copeland and Peter Tufano},
  journal={Harvard business review},
  year={2004},
  volume={82 3},
  pages={90-9, 128}
}
Each corporate growth project is an option, in the sense that managers face choices--push ahead or pull back--along the way. Yet many companies hesitate to apply options theory to initiatives such as R&D and geographic expansion, partly because these "real" options are highly complex. In this article, the authors make the case that the complexity of real options can be eased through the use of a binomial valuation model. Many of the problems with real-options analysis stem from the use of the… CONTINUE READING

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