Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions (Book and CD ROM)
The volatile economy has presented new challenges to the corporate decision-maker, and real options are poised to become the key management tool for today's and tomorrow's businesses. Real options analysis is an accurate method for estimating the value of strategic investments, and it will continue to be utilized in situations where management has flexibility in large capital budget decisions with high uncertainty.Real Options Analysis provides you with a comprehensive overview of the real options methodology and explores the tools and techniques inherent in this method that will allow you to efficiently value strategic investments and decisions. It examines both the qualitative and quantitative aspects of real options, the methods used in valuing real options, why and when they are used, as well as the applicability of these methods in decision-making.Real options expert Johnathan Mun will help you understand and implement real options analysis under a variety of circumstances and over a wide range of industries, from pharmaceutical, oil, and gas to manufacturing and technology. Mun first looks at the qualitative nature of real options and provides actual business cases and scenarios of real options in the industry, as well as high-level explanations of how real options provide much-needed insights for decision-making. He then focuses on quantitative analysis, and reveals the power of Crystal Ball(r) software for real options analysis through the book's companion CD-ROM. This CD-ROM demonstrates a set of sixty-nine models in the Real Options Analysis toolkit software, Crystal Ball(r) Monte Carlo simulation software, and a series of example options analysis spreadsheets that will allow you to perform real options analysis like never before.From the basics of expansion and switching options to advanced options problems such as valuing timing options calculated with stochastic optimization, Real Options Analysis is a complete and accessible guide to the uses of real options in the decision-making process. Through expert advice, in-depth case studies, mathematical formulae, real-world scenarios, real options software, and end-of-chapter questions, Real Options Analysis provides serious insights into the understanding and application of real options when valuing strategic investments and decisions.