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A Valuation Model for Project Standby Capacity

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  • Jan Vlachý

Abstract

This paper addresses the issue of project standby capacity optimization for capital budgeting. A detailed analysis and case study show that this is a particular real-option based situation, which solicits the use of statistical simulation. The method can be recommended as a useful heuristic for corporate capital budgeting, as well as for college-level class instruction.

Suggested Citation

  • Jan Vlachý, 2009. "A Valuation Model for Project Standby Capacity," Ekonomika a Management, Prague University of Economics and Business, vol. 2009(4).
    • Handle: RePEc:prg:jnleam:v:2009:y:2009:i:4:id:83
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    References listed on IDEAS

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    More about this item

    Keywords

    Reálné opce; Real options; Investiční rozhodování; Capital budgeting; Monte Carlo; rezervní kapacita; statistická simulace; Standby Capacity; Statistical Simulation;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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