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Corporate Optimal Investment Under Incomplete Information: A Real Option Method

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  • Mondher Bellalah
  • Shujuan Ding
  • Zhen Wu

Abstract

This paper develops an option pricing model to value a project with taxes and incomplete information. We derive the value of the option to invest in the project and provide the threshold value of the project. Some numerical examples are given to show the characteristics of the optimal investment rule.

Suggested Citation

  • Mondher Bellalah & Shujuan Ding & Zhen Wu, 2012. "Corporate Optimal Investment Under Incomplete Information: A Real Option Method," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 4(1), pages 007-014, June.
  • Handle: RePEc:rfb:journl:v:04:y:2012:i:1:p:007-014
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    References listed on IDEAS

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