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Applications of real options analysis to investment decisions in natural resource industries

Project Member(s): El-Hassan, N.

Start year: 2001

Summary: This project will investigate the application of the methods of real options analysis to a number of financial decision making problems in natural resource industries. Specifically, the formulation of a number of investment decision making problems in natural resource industries will be formulated as the solution to real option pricing problems. An important part of the project will be to develop appropriate numerical techniques for evaluation of the resulting real option pricing equations. Application to some paradigm natural resource investment models, in particular investment decisions in the forestry, mining and electricity power industries will be undertaken.

Keywords: Real options: Option pricing; Investment decisions; Natural Resources; Numerical Methods

FOR Codes: Finance, Banking, Finance and Investment not elsewhere classified, Finance and investment services, Other, Investment and Risk Management