Learning Results
The main purpose of this course is to describe the advantages and limitations of the conventional NPV approach
for valuing investment projects and enable students to apply the real options approach. Show students how to
use the contingent claims approach for valuing financing sources.
The studentes must be able:
1. Implement real options models for valuing investment opportunities.
2. Use the contingent claims approach for valuing options in corporate finance.
Program
1. Investments in real assets and financial strategy: Traditionalmodels for valuing investments in real assets;
advantages and disadvantages of the traditional approach; risk and uncertainty; operational flexibility and
strategic interactions; strategic real options (wait-and-see, expand, abandon, operational flexibility, economic
hysteresis, etc).
2. Capital structure and the cost of capital based on the OPT: Financing sources; options; dynamic WACC; yield
spreads; optimal capital structure; market imperfections; bankruptcy costs; agency theory.
3. Presentation and discussion of scientific articles.
Internship(s)
NAO
Bibliography
Brealey, R. A. and Myers, S. C. (2003), Principles of Corporate Finance, 7th edition, McGraw-Hill.
– Copeland, T. and Antikarov, V. (2003). Real Options: A Practitioner`s Guide, Cengage Learning.
– Copeland, T. E.,Weston, J. F., and Shastri, K. (2004), Financial Theory and Corporate Policy, 4th edition,
Addison-Wesley.
– Damodaran, A. (2001), Corporate Finance: Theory and Practice, 2nd edition, JohnWiley & Sons.
– Dias, J. C. (2012), Lecture Notes.
– Dixit, A. K. and Pindyck, R. S. (1994), Investment under Uncertainty, Princeton University Press.
– Trigeorgis, L. (1996), Real Options: Managerial Flexibility and Strategy in Resource Allocation, MIT Press.