Naslov
The value of flexibility in uncertain times

Autori
Dedi, Lidija

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Conference proceedings, 6th Business & Entrepreneurial Economics Conference / Kolaković, Marko ; Horvatinović, Tin ; Turčić, Ivan. - Zagreb : Studentski poduzetnički inkubator Ekonomskog fakulteta Sveučlišta u Zagrebu, 2021, 173-178

Skup
6th Business & Entrepreneurial Economics Conference (BEE 2021)

Mjesto i datum
NP Plitvička jezera, Hrvatska; online, 26.05.2021. - 29.05.2021

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
flexibility, real options, capital budgeting methods, real net present value

Sažetak
Today's market environment is characterized by constant change and uncertainty. It is difficult to assume that the management will not take certain actions related to the investment project in the event of unexpected unfavorable circumstances or in the event of unexpected favorable circumstances. In such conditions, management has the flexibility to postpone, expand, abandon or otherwise change the investment project at different stages of its life. In this way, flexibility emerges as an added value, and any project that increases flexibility also increases the actual net present value of a project. This paper studies the shortcomings of traditional capital budgeting methods and the possibilities for improvement by applying the real options approach. Given that traditional net present value does not take into account management flexibility, it is necessary to introduce extended or real net present value. For investment projects evaluation in turbulent and uncertain conditions, it is necessary to apply the real options approach. Real option valuation models can quantify elements of flexibility ; which traditional net present value does not take into account.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA