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How Options Analysis Can Enhance Managerial Performance

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  • Andersen, Lars

Abstract

Discounted cash flow analysis is the most common method for valuing projects in a company, but an increasing number of practitioners are now using options methodology to get a truer picture of the real value of a project. This article covers the discounted cash flow methodology, and how this tool fails to fully capture flexibility and uncertainty. After a short overview of financial options, the article covers the main principles behind options valuation of projects.

Suggested Citation

  • Andersen, Lars, 2002. "How Options Analysis Can Enhance Managerial Performance," European Management Journal, Elsevier, vol. 20(5), pages 505-511, October.
  • Handle: RePEc:eee:eurman:v:20:y:2002:i:5:p:505-511
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    Cited by:

    1. K. Maris & K. Nikolopoulos & K. Giannelos & V. Assimakopoulos, 2007. "Options trading driven by volatility directional accuracy," Applied Economics, Taylor & Francis Journals, vol. 39(2), pages 253-260.
    2. Kim, Soo Wook, 2007. "Organizational structures and the performance of supply chain management," International Journal of Production Economics, Elsevier, vol. 106(2), pages 323-345, April.

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