Making real options really work.

  title={Making real options really work.},
  author={Alexander B van Putten and Ian C. MacMillan},
  journal={Harvard business review},
  volume={82 12},
  pages={134-41, 150}
As a way to value growth opportunities, real options have had a difficult time catching on with managers. Many CFOs believe the method ensures the overvaluation of risky projects. This concern is legitimate, but abandoning real options as a valuation model isn't the solution. Companies that rely solely on discounted cash flow (DCF) analysis underestimate… CONTINUE READING