Investment decisions through real options in the technology sector

Authors

DOI:

https://doi.org/10.17981/econcuc.40.1.2019.04

Keywords:

Real options, Options to differ, Technology sector

Abstract

The technology sector is characterized by the existence of projects with flexibility, largely by the opportunity to improve the product before being sent to market, as is the case of video games. The theory under which this type of projects are studied and analyzed are the real options, which complement the traditional methodologies, such as the net present value and the internal rate of return. The methodology applied in this work is based on the Binomial Trees technique, allowing to analyze and value the option to differ in a previously stipulated time. The result of considering the real option increases the value of the project in 33 %, on its calculated value through the net present value, at the same time, reaffirming the importance of taking into account the real option at the time of valuing projects of the technological sector. It is concluded that the creation of a video game project has high applicability in the concepts of real options, due to the uncertainty components that this type of investment decisions suppose.

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Author Biographies

Armando Lenin Támara Ayús, Universidad EAFIT

Phd. in Administration. Master in Finance. Esp. In design and evaluation of Projects. Full Professor Universidad EAFIT. Cra 49 No. 7 South-50. Email: atamaraa@eafit.edu.co

Susana Marin Arango, University EAFIT

Professional in Finance Universidad EAFIT. E-mail: smarina@eafit.edu.co

 

Santiago Cadavid Álvarez, Universidad EAFIT

Professional in Finance Universidad EAFIT. E-mail: scadavi6@eafit.edu.co

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Published

2019-05-14

How to Cite

Támara Ayús, A. L., Marin Arango, S., & Cadavid Álvarez, S. (2019). Investment decisions through real options in the technology sector. ECONÓMICAS CUC, 40(1), 61–75. https://doi.org/10.17981/econcuc.40.1.2019.04

Issue

Vol. 40 No. 1 (2019)

Section

Artículos.

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Copyright (c) 2019 Armando Lenin Támara Ayús, Susana Marin Arango, Santiago Cadavid Álvarez

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