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Efeito da flexibilidade na decisão de investimento: Uma aplicação à exploração do cobre
[Flexibility effect on the investment decision: An application to the exploration of copper]

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Author Info
Gomes Santana Félix, Elisabete
Esperança, José Paulo

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Abstract

This research evidences the value of flexibility on the investment decision, in the exploration sector of copper, face to the existence of an abandonment option. The results of three evaluation models are compared: the Net Present Value; the Binomial and a Suitable Binomial to the exploration sector of copper. Monthly quotations of copper of the LME had been used; values for the Producers Price Index; e values of OT-September with maturity nearest to the time horizon of the investment. To the similarity of other applications of the real options, we confirm that, in uncertainty context, the traditional method significantly understates the return of the investment decisions.

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File URL: http://mpra.ub.uni-muenchen.de/6185/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6185.

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Date of creation: 2004
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Publication status: Published in Revista Economia Global e Gestão nº 1.vol. IX(2004): pp. 11-32
Handle: RePEc:pra:mprapa:6185

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Related research
Keywords: Flexibilidade na Decisão de Investimento Opções Reais Sector de Exploração do Cobre Exploração de Recursos Naturais Métodos de Avaliação de Investimentos

Find related papers by JEL classification:
G39 - Financial Economics - - Corporate Finance and Governance - - - Other
G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Investment Policy
G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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  1. Cox, John C. & Ross, Stephen A. & Rubinstein, Mark, 1979. "Option pricing: A simplified approach," Journal of Financial Economics, Elsevier, vol. 7(3), pages 229-263, September. [Downloadable!] (restricted)
  2. Moyen, Nathalie & Slade, Margaret & Uppal, Raman, 1996. "Valuing risk and flexibility : A comparison of methods," Resources Policy, Elsevier, vol. 22(1-2), pages 63-74. [Downloadable!] (restricted)
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