USING OPTIONS PRICING THEORY TO VALUE SAFETY & ERGONOMICS PROJECTS: A CASE STUDY

This paper applies option pricing theory to value an investment in safety & ergonomics. Utilizing both traditional and perpetual call option frameworks, we quantify project value overlooked by traditional discounted cash flow techniques. In a case study format, it is shown that delaying investment allows the firm to reduce uncertainty associated with safety & ergonomic interventions; with increased costs of delaying encouraging speedier implementation.

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Year of publication:	2015
Authors:	Miller, Luke ; Kelber, Jennifer W.
Published in:	Review of Business and Finance Studies. - Vol. 6.2015, 2, p. 75-84
Subject:	Capital Budgeting \| Options Pricing \| Case Study

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Extent:	application/pdf
Type of publication:	Article
Classification:	G30 - Corporate Finance and Governance. General ; G31 - Capital Budgeting; Investment Policy ; G32 - Financing Policy; Capital and Ownership Structure ; G39 - Corporate Finance and Governance. Other
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011205555