Capital Investments and Real Options: New Proposals

Beatriz Mota Aragón ()
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Beatriz Mota Aragón: Universidad Autónoma Metropolitana

Revista de Administración, Finanzas y Economía (Journal of Management, Finance and Economics), 2011, vol. 5, issue 1, 65-76

Abstract: The main contribution of this research is in the area of Real Option Theory, based on the Net Present Value (NPV) as a stochastic process. A model to value real options is suggested from constructing a continuous model for net present value named “Vasicek extended”. In this context, the Cox-Ingersoll-Ross (1985) model for interest rate is examined. In the model, external control variables (Zt) change the net cash flows. The modified NPV(Zt) gives a more accurate valuation of VPN(Zt,)+f, where f is a real option

Keywords: Capital Investments Theory; Net Present Value; Net Cash Flow; Interest Rate; Real Options Theory; Options Financial Theory; Stochastic Processes. Asymmetric Information (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ega:rafega:201105

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