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Problems of Using Real Options in a Practical Evaluation of Investment Projects

Student: Kafiev Aziz

Supervisor: Vladimir V. Kossov

Faculty: Graduate School of Business

Educational Programme: Management (Bachelor)

Year of Graduation: 2017

Investment attractiveness plays an important role in the adoption of the project. In turn, there are many methods for analyzing the attractiveness under uncertainty. But the most commonly used - is the NPV (Net Present Value) indicator. However, this method does not take into account the strategic flexibility that management has while making decisions. This disadvantage can be eliminated by using the real option method (ROV) . However, there are many problems while using this method in practice, not only in the world, but also in Russia in particular. The purpose of this paper was to illustrate the applicability of the method of real options in the Russian practice. The results of the work include a review of existing real option valuation models, the collection of expert opinions on the applicability of ROA in Russia (via depth interview method), and the practical application of this method in evaluating the investment project of OOO «Kazankompressormash»

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