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| Tekijä: | Angelis, D. |
| Otsikko: | Capturing the option value of R&D |
| Lehti: | Research Technology Management
2000 : JUL-AUG, VOL. 43:4, p. 31-34 |
| Asiasana: | OPTIONS COSTS REVENUE |
| Kieli: | eng |
| Tiivistelmä: | Real option models capture the value of flexibility in R&D projects. The value lies in the facts that management always has the option to abandon the project if the results of R&D are not promising, thus limiting losses to the amount invested in the R&D phase. Traditional net present value (NPV) analysis fails to recognize this flexibility and therefore tends to undervalue R&D opportunities. The Black-Scholes model has been used extensively for financial options, but may be difficult to apply to R&D projects. |
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