Real options valuation of eBusiness
Name
45259592-MIT.pdf
Description
Full printable version
Size
3.9 MB
Format
Adobe PDF
Checksum (MD5)
274ad47b8fbf374632656f069373e55d
Author(s)
Tan, Enk Ee, 1968-
Advisor(s)
Jiang Wang.
Date Issued
2000
Publisher
Massachusetts Institute of Technology
Abstract
Traditional funding criteria like return on investment (ROI) and net present value (NPV) do not work well with most eBusiness. These corporate budgeting techniques were designed for relatively slow progressing or well-established business models. The Internet marketplace is constantly being redefined and most of these projects have a high velocity of evolution and uncertainty. Firms and investors have yet to possess systematic and quantitative financial evaluation tools. After studying the behavior of Internet firm valuations and exhaustively investigating the conventional ways of valuing an eBusiness, this paper finds that real options valuation is an extremely useful analytical tool for valuing eBusiness projects from the management's perspective. It provides management a powerful extension of the traditional cash flow budgeting models, and a structure to attach and quantify strategies. Real options valuation in its current form, however, is not entirely suitable for the use as a valuation tool for traded stocks.
Description
Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2000.
Includes bibliographical references.
Subjects
Sloan School of Management.
MIT Department
Sloan School of Management
Terms of Use
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