The influence of cash flow probability character on investment projects assessment

Finance and investments
Authors:
Abstract:

This article is focused on the possibility of the option theory for assessment of investment projects, cash flows being of probabilistic nature. We discuss the main methods used for assessment of real option value: Black–Scholes model, binominal model, and analyze their benefits and drawbacks. Particular attention is paid to the main characteristic of options for investment projects, creating an additional value, an additional effect.