Real Option Valuation

The Real Option Valuation model encompasses a suite of option pricing tools to quantify the embedded strategic value for a range of investment scenarios. Traditional discounted cash flow investment analysis will only accept an investment if the returns on the project exceed the hurdle rate. While this is a worthwhile exercise, it fails to consider the myriad of strategic options that are associated with many investments. This model provides the ability to identify what options might exist in your proposal and the tools to estimate the quantification of them.

The key features of the Real Option Valuation model include:
- Ease and flexibility of input, with embedded help prompts.
- Informative 'Quick Start' menu for choosing the correct tool for the situation.
- Modified Black Scholes models to value the options to delay, expand, or abandon investments.
- Automatic binomial 'tree' builder model to evaluate complex strategic options with multiple stages.
- Nash equilibrium Game Theory model to evaluate market entry strategies in a competitive environment.
- Ability to predefine historical investment and/or industry risk profiles to utilize across models.

(Requires Microsoft Excel 97 or higher)

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