How To Hook Boat Radio

Robust and successful - but not all-inclusive

Breit several times I have written in this blog about the importance of future options for businesses and the knowledge of the value of this flexibility.

In conversations with managers and controllers on the use of real options analysis, I sometimes hear things like: "Because we have an assessment on capital broad and robust instruments have, we see no current need for additional methods / tools to use. "

No need but only

• if the company in its projects any future action are available to
• these are not relevant
• or no uncertainty is about the future.

Verify that you can evaluate with currently existing in practice methods and instruments following decisions:

termination option (Abandonment option)

As a producer in the automotive industry, you have a long-term supply contract, fixed prices (Calculated in short supply) in volatile costs. There is the offer of an exit clause. How much this clause is worth?
you can build the first stage of the production of a product with very uncertain gross margins (revenues and costs) in two countries. The investments and running costs are lower in A. On the other hand, in B a possible closure much more favorable. Where to invest?

shift option (deferral option)

To go with a completely new product to market, you need a special technology from a supplier. You can buy them exclusively by an amount X. The market for your products is very uncertain. They therefore consider IMPOSE FINES something and want to reserve the technology for 3 years. What is worth this call option?

reduction option (option contraction)

you purchase from the previous owner of non-listed company 50% of the shares. At the same time it grants you the right to reduce your participation within the next three years by half, by buying back the shares at the original price. What are you willing to pay for that right?

exchange option (switching option)

to buy a manufacturing plant and have two offers. A manufacturer offers a system with a rigid energy plan (only energy E1) at a price Pa. Vendor B provides a facility of the energy E1 to E2 and can be converted back to the higher price Pb. Is it worth the flexibility or volatility in which the two energy sources is the higher price justified Pb?

Stepwise investment with optional continuation (Staged investment, optional continuation of project) will

They assume that the claims of the customer solutions in communications technology changing dramatically and are developing a joint partnership, new solutions . The project consists of several steps and your partner is willing to Allow them the right to decide at each stage, whether you continue. How do you rate this right?

related compound options (conditional compound option) take

An analysis of critical success factors suggests that the speed of delivery is becoming more important. If you shorten your semi-automatic switch to a fully automatic production cycle times to the X. You also have the opportunity to join in the next step, fully automatic packaging. How would you rate this content?