TIMELINE GENIAL

Yuleimith Villeros - Group 5 - 12/04/2024

Real options method calculated with Black-Sholes model

DEFINITION

RELATED PROCESSES

The real options method calculated with the Black-Scholes model adapts the formula for valuing financial options to the valuation of business projects. It considers investment as a call option on the future cash flows of the project. Parameters such as volatility and time are adjusted to reflect uncertainty and flexibility in investment decisions, allowin g the real opportunity of a project to be valued beyond its net present value.

Processes related to the real options method calculated with the Black-Scholes model include identifying opportunities, collecting relevant data such as expected cash flows and asset volatility, applying the adapted Black-Scholes formula, analyzing results to assess investment viability and flexibility, and making informed decisions based on the valuation of real options.

FORMULA

value from innovation

Companies can create value from innovation using the real options method with the Black-Scholes model by identifying innovative opportunities, investing flexibly, managing risk, and maximizing value through optimized decision-making based on flexibility and risk management.

Recursos

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