REAL OPTIONS IN BUSINESS VALUATION
REAL OPTIONS IN BUSINESS VALUATION

Summary/Abstract: The corporate value creation and its measurement have been playing a central role in the corporate thinking since the 1990s. More and more people deal with the methodological questions of measuring the value creation. We elaborate a model by which the corporate value can be estimated well. We have combined the traditional financial analysis indicators, the discounted cash flow and free cash flow methods for structuring the model. We have also considered the appropriate management of risk important and, inter alia, output variables of the model have composed the input variables of the real option model connected with the two-dimensional Monte Carlo simulation. Using the two-dimensional Monte Carlo simulation raises a new approach to the management of risk. Developers of the model interpret the risk as a combination of variability and uncertainty therefore we have used it accordingly. Structuring the model, making the intermediate calculations and operating the model by means of the simulation process have been carried out in the Excel spreadsheet programme, connected with the R statistical system. The results have proved that the proper estimation of corporate values can be provided by means of the model and the methods applied.

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