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Reading List assignment/additional notes

Dear All,

As I mentioned today (5/11/2009) in the lecture, in order to address 代写留学文书properly Question 6 of the assignment you should highlight the advantages and weaknesses of the classical investment appraisal techniques. As I mentioned as well, one of the weakness of the NPV, Payback, IRR, etc, relates to the fact that they simply neglect uncertainty (about the future cash flows of the project). The real options theory is based on some of the principles which are followed by NPV, Payback, IRR techniques, but it takes into account the uncertainty underlying each project. Other weakness of those classical methodologies is that they neglect the effect of competition on firm’s investment decisions. My article (eBridge) can help you to see how in real options we can also consider the effect of competitions when assessing an investment project.

Given that in our days the level of uncertainty regarding the future performance of the investment projects/companies is very high, due to global competition among firms, high innovation rates, terrorist attacks, etc, the foundations of finance assignment is designed to help you to master the classical investment appraisal techniques and to be aware of other methodologies which might, in some cases, be more accurate to assess whether a company should accept or reject a project (real options).

You are not required to master the real options valuation technique, in the sense that you should not use it in your calculations (Q1 to Q5). However, you are required to know the fundamentals underlying the real options theory, its applications, usefulness, for instance to help you in getting the best answer regarding the investment problem(s) you have in your assignment.

Below I will give you, as a suggestion, a basic textbook Reference about real options. If you can afford to buy this book that would be great (see Amazon, UK), otherwise you should try to get it from the library. You can use any other book about real options, in case you find difficult to get this, given that the aim of the book is to help you to understand the very basic concepts underlying real options models and not to lead you to master the real options methodology. You can also download academic articles from the internet to help you in question 6 of the assignment. Do your best in terms of research. I’ll look forward to see your results.

Remember that you will have to put your name on the first page of the assignment.

So try to do something which you can make you proud of!

Textbook: Amram and Kulatilaka (1999), Real Options, Harvard Business School press, ISBN: 0-87584-845-1.

PS: Do not forget to mention, in the References Section, all references https://www.51lunwen.org/lxws.htmlyou use in the assignment.

Alcino Azevedo                                5 November, 2009