Abstract
For evaluation purposes, it is suggested that R&D projects might be treated as real options. Unfortunately, this is not as easy as it seems. In the very early stages of strategically important projects, firms want to keep the project information secret. Therefore, a market cannot develop for such projects. In later stages, the opportunities to exercise options is probably quite limited. Thus in these stages, more traditional evaluation criteria, such as expected NPV, appear to be sufficient for many practical purposes. In the article, we discuss this “evaluation dilemma.”
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Brockhoff, K. (2000). Problems of Evaluating R&D Projects as Real Options. In: Frenkel, M., Hommel, U., Rudolf, M. (eds) Risk Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-04008-9_11
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DOI: https://doi.org/10.1007/978-3-662-04008-9_11
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