초록

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Abstract ▼ AI-Helper

This study introduces the simulation approach supplementing the sensitivity analysis out of the conventional discounted cash flow(DCF) method and the widely used real options pricing method(ROPM) in evaluating economic feasibility for investment projects. Especially, the ROPM method can explicitly i...

This study introduces the simulation approach supplementing the sensitivity analysis out of the conventional discounted cash flow(DCF) method and the widely used real options pricing method(ROPM) in evaluating economic feasibility for investment projects. Especially, the ROPM method can explicitly include the uncertainty inherent in the project that is ignored in the DCF method, and properly incorporate the management"s flexibilities to cope with environmental changes into economic evaluation. A case study investigates an imaginary investment project to deal with constructing two units of Korea standard nuclear plants and operating for economic life. The simulation analysis explicitly considers the uncertainty of electricity prices, and represents the feasible set of net present value of project as a probability. The economic value based on the ROPM with the option to continue appears to be higher that of the traditional DCF method.

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