IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Optional Approach for Investment Projects Valuation and It’s Appliance to the Project of Producing Healthy Organic Food

  • Adnan Rovcanin

    (University of Sarajevo, Faculty of Economics)

  • Minela Nuhic

    (University of Sarajevo, Faculty of Economics)

  • Amin Sejdic

    (University of Sarajevo, Faculty of Economics)

Registered author(s):

    The aim of this paper is to present the appliance possibilities of optional approach to investment projects valuation, as well as new theoretical and methodological framework of investment analysis, to project of producing and selling healthy organic food. Unlike traditional methods of project valuation, this new, contemporary approach provides valuation of management flexibility and possibility of adjustment (correction of previous decisions) in accordance to the market conditions. In light of dramatic changes and increasing risks and uncertainty in investment decision-making, it is necessary to complete the traditional approach by optional, in order to make more rational allocation of resources. The necessity of using optional approach is reflected from the fact that the results of projects valuation according to the traditional and modern approach may be contradictory. This paper presents the Black-Scholes and binomial option pricing model, and appliance of option valuation is shown on the project of producing and selling healthy organic food and healthy food restaurant as an extension activity. While traditional methods of valuating investment projects valuated the project of producing healthy organic food as unprofitable, the optional approach shows that this project is acceptable, which confirms the importance of this approach.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.ien.bg.ac.rs/index.php/en/2011/2011-3-4
    Download Restriction: no

    Article provided by Institute of Economic Sciences in its journal Economic Analysis.

    Volume (Year): 44 (2011)
    Issue (Month): 3-4 ()
    Pages: 44-58

    as
    in new window

    Handle: RePEc:ibg:eajour:v:44:y:2011:i:3-4:p:44-58
    Contact details of provider: Postal: 12 Zmaj Jovina St, 11000 Belgrade, Serbia
    Phone: +381 11 2622 357, 2623-055
    Fax: +381 11 2181 471
    Web page: http://www.ien.bg.ac.rs
    Email:


    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ibg:eajour:v:44:y:2011:i:3-4:p:44-58. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zorica Bozic)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.