Exploring real options in the capital budgeting of investments within physical asset management

[摘要] ENGLISH ABSTRACT: This study explores the implementation of an integrated capital budgetingvisual mapping framework comprised of both Discounted Cash Flow (DCF)and Real Options Analysis (ROA) techniques. Physical asset investment decisionsare based largely on rigid discounted cash flow tools which provideuntimely and incomplete decisional criteria. While literature outlines the widespread use of traditional DCF techniques, it very openly reveals large limitations,including its static inflexibility and slow to evolve framework. ROAis a more recent valuation tool based on stock option theory. It brings intoaccount added value found in the flexibility of managerial decision making anduncertain conditions. This study implements a combined DCF and ROA capitalbudgeting tool within a Physical Asset Management (PAM) environment.The validity of the framework is realised through an industry relevant casestudy presented by a South African mining company.

[发布机构] Stellenbosch University