An R&D Project Dealing with Mechanical Bits and Pieces in Real Option Analysis

Hua Luo; Ming Zi Zhu

doi:10.4028/www.scientific.net/AMR.472-475.583

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HomeAdvanced Materials ResearchAdvanced Materials Research Vols. 472-475An R&D Project Dealing with Mechanical Bits and...

An R&D Project Dealing with Mechanical Bits and Pieces in Real Option Analysis

Abstract:

The goal of this paper is to study the R&D project under incomplete information. We extend the multi-step quadrinomial option pricing model through a practical case, which is the R&D project of the machinery to deal with mechanical bits and pieces. We pricing the real options valuation (ROV) of the project and show a decision tree, which can provide managers flexible decisions to analyze technology and market uncertainty.

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Advanced Manufacturing Technology, ICMSE 2012

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Periodical:

Advanced Materials Research (Volumes 472-475)

Pages:

583-586

DOI:

https://doi.org/10.4028/www.scientific.net/AMR.472-475.583

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Online since:

February 2012

Authors:

Hua Luo, Ming Zi Zhu

Keywords:

DTA, Multi-Step Quadrinomial Option Pricing Model, R&D, ROA, ROV

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References

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