We consider a firm that must undergo a costly and time-consuming regulatory process before making an irreversible, lagged investment whose value varies randomly. We analyze two cases: regulatory approval is valid forever or it expires after some time. We apply our model to Hydro Québec's...

Nous avons procédé à une évaluation du projet VEGA de Northern Canada Gas (NCG) dans le but de montrer comment l'approche options réelles peut s'appliquer à ce type de projet. Bien que réaliste, cette étude est basée sur un cas fictif. Ainsi, elle se veut plutôt exploratoire quant à...

The goal of this paper is to demonstrate how the RO methodology can be applied to evaluate TransEurope Communications (TEC) investment projects. Although realistic, the business case analysed here is fictional. The main conclusion and lesson of this exercise is: One cannot determine a value...

We clarify the foundations of project evaluation under multiple risk sources and we show that the way the NPV method is typically applied in most firms and organizations violates some fundamental principles of value creation such as the additivity and absence of arbitrage principles. Project...

A wide range of tests for heteroskedasticity have been proposed in the econometric and statistics literatures. Although a few exact homoskedasticity tests are available, the commonly employed procedures are quite generally based on asymptotic approximations which may not provide good size...