Simplifying Real Options Valuation with Decision Analysis

This work critiques the complexity of traditional real options models and proposes a decision analysis framework instead. By focusing on practical decision-making tools, it offers new formulas that adjust for different market behaviors. The model highlights the challenges of trading non-liquid real assets and validates using risk-neutral pricing even without perfect market assumptions. It ultimately bridges the gap between academic finance and the real needs of business practitioners.

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Applying Real Options to Safety and Ergonomics Investments

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An Intuitive Model for Valuing Deferral Options