engleski

Possibilities of applying real options in assessment of economic feasibility of investments in agricultural production

Traditional methods of assessing economic justification of an investment do not consider the importance of investment project initiation time, nor do they respect possibilities for delaying of that moment. Due to the fact that investments are always related to uncertainty and risks, possibility of delay to collect additional information related to the project may significantly influence initial investment decision. In order to provide flexibility of business, it is necessary to improve traditional investment analysis with application of real options. In spite of wide acceptance of real options in theory, its application in practice is still insufficient. With the aim to intensify its practical application, this paper presents three main types of real options, as follows: option to wait, option to expand and option to delay, and elaborates the most applied real options valuation models.

investment decisions ; methods of economic justification of investments ; real options

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