This paper addresses the classical real options problem taking debt renegotiation into account. A critical feature is that equityholders can freely initiate debt renegotiation at most once after debt issuance. We provide explicit solutions of the pricing and timing of the option to start a...

This paper analyzes the impact of one single debt renegotiation round on investment and financing decisions. Shareholders have an American renegotiation option for a permanent coupon deduction. We produce an analytical proof for a widely-used assertion that optimal renegotiation time is the...

We consider an irreversible investment in a project, which generates cash flow following a double exponential jump-diffusion process and its expected return is governed by a continuous-time two-state Markov chain. If the expected return is observable, we present explicit expressions for the...