Article ID: | iaor20073313 |
Country: | South Korea |
Volume: | 32 |
Issue: | 3 |
Start Page Number: | 180 |
End Page Number: | 190 |
Publication Date: | Sep 2006 |
Journal: | Journal of the Korean Institute of Industrial Engineers |
Authors: | Oh Hyung-Sik, Lee Deok-Joo, Lim Kum-Soon, Kim Ki-Hong |
Keywords: | investment, finance & banking |
We evaluate the economic value and the optimal investment timing of IMT-2000 in Korea, in the perspective of a service provider who owns the business license for IMT-2000, by using the real options analysis. The result clearly shows the project value with options is positive and delaying the investment is more favorable to the provider. Binomial lattice approach, in which we try to describe American call option and sequential compound option, and sensitivity analysis present the optimal decisions according to future states and enable the management to make decision strategically and proactively.