Real Options Analysis : Tools and Techniques for Valuing Strategic Investments and Decisions

Cutting-edge information on the valuation and application of real options
Most investors and risk managers are familiar with financial options. But the real option structure is embedded in billions of dollars of stocks traded every day, and in billions of dollars of strategic or investment decisions made by many companies. Real options are a useful tool to guide a firm's strategic planning, and can create or enhance a firm's value.
Real Options Analysis provides a revolutionary approach to evaluating and valuing capital investment strategies by taking into consideration the real options inherent in the strategic decision-making process. This book provides readers with a qualitative and quantitative description of real options, the methods used in solving real options, why and when they are used, and the applicability of these methods in decision-making. In addition, multiple business cases and real-life scenarios are discussed. This includes presenting and framing the problems, as well as the introduction of a stepwise quantitative process developed by the author for solving these problems using the different methodologies inherent in real options-with the assistance of Real Options software powered by Crystal Ball(TM), which is included on the companion CD-ROM. With technical presentations of models and approaches backed by theoretical and mathematical justifications, Real Options Analysis is one of the most comprehensive guides available on real options.

JOHNATHAN MUN is Vice President of Analytical Services at Decisioneering, Inc., the makers of Crystal Ball(r) analytical software. His duties focus primarily on heading up the development of real options and financial analytics software powered by Crystal Ball(r). Prior to joining Decisioneering, he was a consulting manager and financial economist in the Valuation Services and Global Financial Services practice of KPMG Consulting, and a manager with the Economic Consulting Services practice at KPMG LLP. During his tenure at KPMG Consulting and at Decisioneering, he has advised, consulted, and applied real options analysis at multiple firms including Unilever, BP, Credit Suisse, Motorola, Intel, and El Paso Electric. He is also currently a visiting professor in finance, economics, and statistics at various universities, including University of Applied Sciences (Germany), Swiss School of Management (Switzerland), and Golden Gate University (California). He also provides seminars and lectures on the topics of real options, simulation and risk analysis, and corporate finance.