TITLE

Real Options: Another Way To Value Internet Initiatives

AUTHOR(S)
LATIMORE, DAN
PUB. DATE
May 2000
SOURCE
Financial Executive;May/Jun2000, Vol. 16 Issue 3, p23
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article discusses the use of real options to value Internet businesses. The uncertainty or nonexistence of cash flows makes traditional valuation techniques such as return on investment or net present value inappropriate for Internet firms. A better method that captures the value of uncertainty is the use of real options. Real options come in two varieties. Growth options are suitable for growing firms, while flexibility options better fit companies whose future plans may be in flux. The author discusses both types and presents a sample valuation.
ACCESSION #
11861765

 

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