Improving investment decision making by expanding key knowledge with real option tools

A1 Journal article (refereed)


Internal Authors/Editors


Publication Details

List of Authors: Alacarz Garcia Francisco, Heikkilä Markku
Publisher: Taylor & Francis
Publication year: 2003
Journal: Journal of Decision Systems
Volume number: 12
Issue number: 3-4
Start page: 345
End page: 368


Abstract

Assessment of investment profitability with discounted cash flows has
proven insufficient when industry structures change. Managers need an
extended flexibility in decision–making that DCF analyzes cannot offer.
Real Option valuation as a method for improving flexibility in
investment decisions has been widely researched but less used in
business. With good support tools it is possible for managers to cross
the threshold to Real Option methods and thinking. Real Option
spreadsheet tools support both decision–making processes and business
learning. They utilize the flexibility that new key knowledge brings to
volatile industry situations and lead to better investment decisions.


Keywords

decision-making, Fuzzy Logic, Real option valuation

Last updated on 2019-16-10 at 03:16