Search results for "Option value"
showing 2 items of 2 documents
Incentive Properties of Residual Income when There is an Option to Wait
2005
Performance measures based on residual income are increasingly popular. The academic literature shows that residual income has important incentive properties when management bases investment decisions on the net present value (NPV) rule. My analysis focuses on the case in which investment decisions can be postponed, when management must extend the simple NPV rule by considering an option value. My analysis shows that some important incentive properties of residual income still hold when there is an option to wait, but only when the residual income measure is correctly adjusted. I also provide an incentive-based explanation of why the capital charge rate within firms is often significantly h…
Business valuation: classical and advanced methods
2020
The topic chosen by the authors implies a qualitative rather than quantitative research approach. The aim of this paper is having assessed the value of a particular company using classical and advanced approaches to analyse the evaluation results obtained using different approaches and give recommendations to company managers. To achieve the aim, the following objectives were set: explore different views on the interpretation of the company as a subject of evaluation; analyse the major methods of assessing the value of companies; having gathered empirical data, assess the value of the particular company using classical and advanced methods; conduct a sensitivity analysis by considering fact…