Jou, Jyh-Bang; Lee, Tan - In: The European Journal of Finance 10 (2004) 6, pp. 489-509
This article constructs a real options model in which a firm has a privileged right to exercise an irreversible investment project with a stochastic payoff. Supposing that the investment costs are fully sunk, a firm that exercises the investment option after debt is in place will then choose a...