Psychological processes on e learning outcomes of national economics university students during covid 19 pandemic

NATIONAL ECONOMICS UNIVERSITY -*** - FINANCIAL MANAGEMENT REPORT THE EFFECTS OF PSYCHOLOGICAL PROCESSES ON E-LEARNING OUTCOMES OF NATIONAL ECONOMICS UNIVERSITY STUDENTS DURING COVID-19 PANDEMIC Class : E-MQI 62 Group : Members : Nguyễn Phương Anh Vũ Huyền Chi Trần Thị Thuý Hà Nguyễn Thanh Huyền Cao Thị Oanh Lù Tuấn Khoa Hanoi, October 2022 TABLE OF CONTENTS ABSTRACT A B INTRODUCTION MAIN CONTENT I.Real Options In Theory 1.Limitations of DCF and the development of real options in capital budgeting 2.Definition of real options and its benefits in capital budgeting 4.Types of Real Options 4.1 Growth (Expansion) Options 4.2 Abandonment/Shutdown Options 4.3 Investment Timing Options 4.4 Flexibility Options 10 5.The calculation of Real Options value 10 II.Real Options In Practice: Application In Reality 17 1.Real Options as a corporate financial tool in reality 17 2.Applications of Real Options in different ar eas 18 C CONCLUSION 23 ABSTRACT This report's goal is to give readers a basic understanding of real options, including their background, definition, features, and categorization Following that, the paper also explains the significance of Real Option in corporate financial management, particularly in capital budgeting Moreover, to further explain how the value of real options is calculated and to specifically demonstrate various kinds of real options, illustrative examples are also provided in this paper In particular, we also provide an overview of Real Option's practical application A INTRODUCTION In an increasingly uncertain and dynamic global marketplace, managerial flexibility has become essential for firms to successfully take advantage of favorable future investment opportunities, respond effectively to technological changes or competitive moves, or otherwise limit losses from adverse market developments Thinking of future investment opportunities as “real options” has provided powerful new insights that in many ways revolutionized modern corporate resource allocation Perhaps the most innovative model of corporate finance in recent years is in the valuation of real options and flexibility A real option is an option on real assets rather than financial assets and is often tied to managerial flexibility under conditions of risk Flexibility refers to management’s ability to make choices The application of option concepts to value real assets has been an important and exciting growth area in the theory and practice of finance, especially in capital budgeting It has revolutionized the way academics and practitioners think about investment projects by explicitly incorporating management flexibility into the analysis This flexibility can represent a substantial part of the value of many projects Neglecting it can grossly undervalued these investments and induce a misallocation of resources in the economy The evidence to date is that using a real options paradigm can save firms from making large sunk-cost investments while simultaneously increasing firm value As (Copeland & Keenan, 1998) suggest, recognizing real options can help managers assess the profitability of new projects and can provide flexibility in deciding whether and when to proceed with new and later phases of projects, especially when they are close to breakeven or not currently profitable In this report, we discuss real options in two main parts The first one is about real options in theory which includes its definition, benefits, specific features, types, and calculation of its valuation Subsequently, its applications in various fields would be mentioned and analyzed B I MAIN CONTENT Real Options In Theory Limitations of DCF and the development of real options in capital budgeting DCF was originally developed to value such securities as stock and bond – which are passive investments (Brigham & Houston, 2021) In those investments, all risks are completely accounted for by the discount rate and most investors have no influence over the cash flows that result (Mun, 2012) noted that traditional DCF techniques such as NPV clearly show the factors in the time value of money and risk structure Besides, this method is widely used because of its simplicity to evaluate simple, passively managed projects However, the method fails to consider the uncertainty and variability with which a project can evolve In reality, firm and project risk can change during the course of a project Besides, in most circumstances, if we were to perform a simple discounted cash flow model, the most sensitive variable is usually the discount rate The discount rate is also the most difficult variable to correctly quantify The issues arising from the DCF method will be explained in detail in Table 1.1 DFC Assumptions • Decisions are made now, and cash flow streams are fixed for the future Realities • Uncertainty and variability in the project process: Not all decisions are made today, some may be deferred to the future when there is no longer uncertainty • Once launched, projects are passively managed • Future free cash flows are highly predictable and easy to determined • All risks are completely accounted for by the discount rate • All factors that could affect the outcome of the project and value to the investors are reflected in the DCF model through the NPV or IRR • Unknown, intangible, or immeasurable factors are valued at zero • Projects are usually actively and continuously managed through project life cycle, including checkpoints, decision options, budget constraints and so forth • In fact, it is difficult to estimate the cash flows because they are risky in nature • Firm and project risk can change variably when the project is conducted • Because of project complexity and socalled externalities, it may be difficult or impossible to quantify all factors in terms of incremental cash flows • Many of the important benefits are intangible assets or qualitative strategic positions Traditional analyses like the discounted cash flow are fraught with problems They underestimate the flexibility value of a project and assume that all outcomes are static and all decisions made are irrevocable In reality, business decisions are made in a highly fluid environment where uncertainties abound and management is always vigilant in making changes in decisions when the circumstances require a change To value such decisions in a deterministic view may potentially grossly underestimate the true intrinsic value of a project New sets of rules and methodology are required in light of these new managerial flexibilities Document continues below Discover more from: Financial Management 168 documents Go to course 20 tập tài doanh nghiệp 10 Financial Management 100% (12) 21 cau hoi binh luan tcdn 20 Financial Management 100% (3) BÀI TẬP TỔNG HỢP QTTC 10 Financial Management 100% (1) Intermediate of Financial Management 9th edition Chapter Solution Financial Management 100% (1) Phân tích tình hình tài Vinamilk 37 Financial Management 100% (1) Financial Management Midterm Financial Management 100% (1) It should be emphasized that real options analysis builds upon traditional discounted cash flow analysis, providing value-added insights to decision -making, which will be discussed below Definition of real options and its benefits in capital budgeting An option is a right, but not an obligation It presents the freedom of choice, after considering the relevant information (Brach, 2003) In the financial markets, an option is the freedom of choice after taking into account the additional information that increases or decreases the value of an asset A “real” option is different from a “financial” option A real option is the flexibility a manager has for making decisions about real assets (Sick, 1995) Or according to (Brigham & Houston, 2021), the real option is the right, but not the obligation, to take some future action Unlike DCF techniques, real options enable firms to cope with high levels of uncertainty about the upside potential or downside risk of an investment and allow for high levels of flexibility (Amram & Kulatilaka, 2000) Managerial decisions create calls and put options on assets that give the managers the right, but not the obligation to utilize those assets to achieve strategic goals and maximize the value of a firm Financial options typically have a finite term to maturity, whereas many real options have a perpetual term to maturity (Sick, 1995) Specific features of Real options Types of Real Options 4.1 Growth (Expansion) Options An expansion option is an embedded option that allows the firm that purchased a real option (which is a right to undertake certain actions) to expand its operations in the future at little or no cost An expansion option, unlike typical options that obtain their value from an underlying security, receives its worth from the flexibility it provides to a company (Elizabeth Blessing, 2020) To better understand the growth option, we will take an example Example: When company A invests in a project during the investment period in that project, the manager will receive the real option when there is a right choice but not required The manager will be faced with the choice of whether to invest more money and be more profitable in the future or continue to keep the amount invested initially The manager's decision to invest more money in the project is said to be a growth option 4.2 Abandonment/Shutdown Options The option of stopping a project if operating cash flows turn out to be lower than expected.( Giáo trình khong biết trích dẫn :v) In capital budgeting, we generally assume that a firm will undertake a project for the project’s full physical life However, this is not always the best course of action If the firm’s project has an abandonment option that allows the project to be stopped before the end of its physical life, this can increase expected profitability and lower risk For example, when a company decides to invest in a project after its implementation without success, the return on profit is not equal to the amount of investment, resulting in a capital loss When there is no real option, the company will not have the choice to abandon the project But with the real option, the company's manager can choose to discard the entire project, withdrawing the investment 4.3 Investment Timing Options Investment Timing Option is an option as to when to begin a project Often, if a firm can delay a decision Traditionally, an NPV analysis assumes that projects will be accepted or rejected, which implies that they will be undertaken now or never However, in practice, companies sometimes have a third choice—delay the decision until later, when more information will be available Such investment timing options can affect projects’ estimated profitability and risk For example, with Investment Timing Options, managers will have the choice of investing in the project now or after observing whether the company should invest in the project or not Here, the options are optional, and management's decisions are based on information as well as the company's return 4.4 Flexibility Options An option that permits operations to be altered depending on how conditions change during a project’s life Many projects offer flexibility options, which permit the firm to change either the inputs it uses or the output it produces after operations have commenced Flexibility Options are not based on the success or failure of a project but on the flexibility of the company in the face of market fluctuations For example, company A may choose to invest in paper towels or cloth towels After selecting and producing tissues, the manager realizes that the demand for cloth towels is higher Managers have the option of switching to tissue products in exchange for higher benefits These are correct options, but they are not required The calculation of Real Options value To evaluate the value of options we use NPV as a tool With the formula to calculate the value of the option is: CASE 1: If the expected NPV without the real option is positive, then Value of the Option = Expected NPV with the real option - Expected NPV without the real option CASE 2: If the expected NPV without the real option is negative, then Value of the Option = Expected NPV with the real option - Note: If a negative NPV project does not have a real option, then it would not be undertaken In these cases, the expected NPV without the real option is zero Firstly, we come to growth (expansion) options To make that clear, we will go into the specific example of the growth option to see it more clearly For example, GRE Inc is considering a 3-year project with an initial investment of $3 million at t = It will generate positive cash flows for years, and it is considered to have above -average risk, so a 12% WACC is used Part I Project Without the Growth Option Outcome Prob Cash Flow at End of Period NPV@ 12% Good 50% –$3,000 $1,500 $1,500 $1,500 $603 Bad 50% –$3,000 $1,100 $1,100 $1,100 –$358 Expected NPV $122 Part II Project with the Growth Option Outcome Prob Cash Flow at End of Period Cash flows, initial investment –$3,000 $1,500 50% $1,500 $1,500 12% –$1,000 $5,000 Cash flows, growth investment Good NPV@ –$3,000 $1,500 $500 $6,500 $3,364 Bad 50% –$3,000 $1,100 $1,100 Expected NPV $1,100 –$358 $1,503 As the value above, we have seen in Part I, looks at the investment without considering an embedded real option to expand the project At Time 0, GRE would invest $3 million Because this is considered a relatively risky investment, a WACC of 12% is used There is a 50% probability of success, in which case the project will yield positive cash inflows of $1.5 million per year for years There is also a 50% probability of poor results, in which case inflows will be only $1.1 million per year for years If the project is successful, the NPV will be $603,000, but the NPV will be -$358,000 if the project is unsuccessful With a predicted NPV of $122,000, it seems likely that we would accept this option, but before that, we will go to Part 2, where we recognize the existence of the growth option The firm would know whether conditions are good at the end of Year 1, so it would then invest another $1 million to expand at Time The expansion would produce cash flows on demand in future years; the present value of those flows, at the end of Year 3, is estimated to be $5 million We then add the new cash flows to the original cash flows to obtain the "total good scenario cash flows." The NPV under good conditions is $3,364 million The bad-case cash flows are the same as in Part I, and their NPV is -$358,000 Now when we find the expected value of the project, it is $1.503 million So what is the value of the option here? With the expected NPV without the growth option is positive, we can use the formula: Value of the Option = Expected NPV with the growth option - Expected NPV without the growth option = $1.503 - $0.122 = $1.381 million So here the value of the growth option is $1,381 million Secondly, we will go to Abandonment/Shutdown Options For example, suppose GRE is considering another project, and it is negotiating with a key supplier regarding the cost and availability of electricity Typically, the utility requires a guarantee for the purchase of a minimum amount of power before it will bring in the required power lines, because it wants assurance that its investment will not be stranded The result is that if GRE undertakes the project, GRE will be forced to operate the project for its full 4-year life The initial investment would be $1 million at t = the project was considered to have a relatively low risk, so its cost of capital is 10% The project was considered to have a relatively low risk, so its cost of capital is 10% Part I Project can’t be abandoned Outcome Prob Cash Flow at End of Period NPV@ 10% Best Case 25% –$1,000 $400 $600 $800 $1,300 $1,348 Base Case 50% –$1,000 $200 $400 $500 $600 $298 Worst Case 25% –$1,000 –$280 –$280 –$280 –$280 –$1,888 Expected NPV $14 Part II Project can be abandoned Outcome Prob Cash Flow at End of Period NPV@ 10% $1,300 $1,348 Best Case 25% – $1,000 $400 $600 $800 Base Case 50% – $1,000 $200 $400 $500 $600 $298 Worst Case #1 0% – $1,000 – $280 – $280 – $280 –$280 – $1,888 Don't Use Worst Case #2 25% – $1,000 – $280 $200 $0 $0 – $1,089 Use Expected NPV $214 Part I The initial investment would be $1 million at t = There is a 50% probability of the base-case results and a 25% probability of both the best-case and worst-case outcomes The expected net present value is $14,000 Consider Part II, the analysis where abandonment is possible, the situation that would exist if GRE could abandon the project We assume that it could decide, once it saw the bad results in Year 1, to close the operation and that it could sell the equipment for $200,000 in Year There would be no cash flows in Years and 4, and the new worst-case #2 scenario NPV would be −$1,089,000—bad but still much better than the worstcase #1 scenario, the “can’t abandon” situation Given the option to abandon, GRE would never choose the Worst #1 case; if things turned out badly, it would choose the Worst #2 case and abandon the project Therefore, when we calculate the expected NPV, we assign a zero probability to the Worst #1 case and a 25% probability to the Worst #2 case The result is an expected NPV of $214,000, up from $14,000 when abandonment was not a possibility So the value of Abandonmen Option here is: Value of the Option = Expected NPV with the abandonment option - Expected NPV without the abandonment option = $214 - $14 = $200 thousand Thirdly, about Investment Timing Options: For example, GRE Inc is considering a 3-year project with an initial investment of $3 million at t = It will generate positive cash flows for years, and it is considered to have above-average risk, so, a 12% WACC is used Part I Project Without the Timing Option Outcome Prob Cash Flow at End of Period NPV@ 12% Good 50% –$3,000 $2,000 $2,000 $2,000 $1,804 Bad 50% –$3,000 $450 $450 $450 –$1,919 –$58 Expected NPV Part II Delay the Decision Until We Know the Market Conditions Outcome Prob Cash Flow at End of Period NPV@ 12% Good 50% $0 –$3,000 $2,000 $2,000 $339 Bad 50% $0 $0 $0 $0 $0 Expected NPV $170 Part I, there is a 50% probability that market conditions will be strong, in which case the project will generate cash flows of $2 million per year There is also a 50% probability that demand will be weak, in which case the annual cash flows will be only $450,000 If the market is strong, the NPV will be $1,804 million, but if demand is weak, the NPV will be −$1,919 million The expected value, assuming the project is undertaking today, is −$58,000, so it appears that the project should be rejected Now look at Part II Here we assume that GRE can delay the decision until next year, when more information will be available about market conditions Because of the anticipated delays in technology, if the project is delayed, cash flows will continue only years after the initial investment is made Therefore, delaying the decision will also mean giving up year of positive cash flows But if conditions are good, the firm will proceed and realize an NPV of $339,000, while if conditions are bad, it will simply not make the investment and thus will have a zero NPV The probability of each outcome is 50%, and the expected NPV, as of t 0, is $170,000 So the value of Investment Timing Options is: Value of the Option = Expected NPV with the timing option - = $170 - = $170 thousand Finally, about the Flexibility Options: Part I Project Without the Flexibility Option Outcome Prob Cash Flow at End of Period NPV@ 12% Strong demand 50% –$5,000 $2,500 $2,500 $2,500 $1,005 Weak demand 50% –$5,000 $1,500 $1,500 $1,500 –$1,397 –$196 Expected NPV Part II Project with the Flexibility Option Outcome Prob Cash Flow at End of Period 12% $2,500 $2,500 $2,500 $905 $2,250 $2,250 –$366 Strong demand 50% –$5,100 Weak demand - Switch products 50% –$5,100 Expected NPV NPV@ $1,500 $270 In Part I, with an initial investment of $ million, in the case of strong demand, the company will earn $ 2.5 million per year for years; in the case of weak demand, the company will earn $ 1.5 million annually We can see that without Flexibility options, we would have an expected NPV of -$196,000 However, as we see in Part II, if we change the product in year 2, we can see that the company will earn $2.25 million per year and the expected NPV will be $270,000 As a result, we have the benefit of flexibility options Value of the Option = Expected NPV with the flexibility option - = $270 - = $270 Thousand II Real Options In Practice: Application In Reality Real Options as a corporate financial tool in reality According to survey results, the majority of businesses have been slow to adopt Real Options (Graham & Harvey, 2001), based on the replies of 392 CFOs, indicate that real options rank eighth among the 12 capital budgeting strategies they examined, with nearly 27% of respondents reporting they use this technique almost always or always In a study of 313 European CFOs, (Brounen, De Jong, & Koedijk, 2004) find almost identical results as Graham and Harvey regarding the ranking and use of real options In a survey of 205 Fortune 1000 CFOs, (Ryan & Ryan, 2002) find that real options rank last in a field of 13 supplementary capital budgeting tools with a utilization rate of 11.4% (Teach, 2003) reports the results of a Bain and Company survey conducted in 2000 of 451 senior executives from 30 industries about their views of management techniques and finds only 9% using real options In these surveys, the authors limit their analysis of real options to identifying the relative use of real options compared with other capital budgeting techniques (Block, 2007) focuses exclusively on real options and capital budgeting In his survey of Fortune 1000 companies, Block receives 279 responses but finds that only 40 (14.3%) of the responding managers use real options The 40 users come mainly from industries where sophisticated analysis is the norm, such as technology, energy, and utilities Further, he finds that industry classification has a significant relationship to the use of real options but does not have a significant relationship to the techniques used Respondents report using real options for new product introduction (36.2%), research and development (27.8%), mergers and acquisitions (22.1%), foreign investment (9.6%), and other (4.3%) Block finds that the most common techniques for using real options are binomial lattices, risk-adjusted decision trees, and Monte Carlo simulation The primary reasons that managers give for not using real options are a lack of top management support (42.7%); discounted cash flow is already a proven method (25.6%); real options require too much sophistication (19.5%); and real options encourage excessive risk taking (12.2%) Commenting on the current status of real options, (Triantis, 2005) states that “the extent of acceptance and application of real options today has probably not lived up to the expectations created in the mid- to late-1990s.” In a similar vein, (Teach, 2003) notes that while real options may not be poised to conquer the corporate world in the short run, perhaps they will prove their value in the long run In support of this notion, (Block, 2007) reports that 43.5% of the nonusers indicate there is a good chance they will consider using real options in the future In summary, survey evidence suggests that the use of real options analysis lags behind DCF analysis but is increasing, especially among large firms According to (McDonald, 2006), “Despite survey evidence reporting that most managers not claim to use real options methods when making capital budgeting decisions, academic studies generally find both managerial behavior and market pricing to be consistent with the predictions of real options models.” Thus, DCF analysis and real options analysis can play a complementary role to each other As (Guerrero, 2007) notes, real options is an important extension of DCF analysis Applications of Real Options in different areas Besides theoretical developments, real options applications have been receiving increased attention Real options valuation has been applied in a variety of contexts, such as natural resources, competition, and business strategy, production, real estate, R & D, public good, mergers and acquisitions, corporate governance, interest rates, inventory, labor, venture capital, advertising, legal, hysteretic effect, and corporate behavior, environmental development, and protection We have selected the more prominent areas of research literature to be reviewed Natural Resource Investments Early applications naturally arose in the area of natural resource investments due to the availability of a traded resource or commodity prices, high volatilities, and long durations, resulting in higher and better option value estimates For example, (Brennan & Schwartz, 1985) utilize the convenience yield derived from futures and spot prices of a commodity to value the options to shut down or abandon a mine (Paddock, Siegel, & Smith, 1988) value options embedded in undeveloped oil reserves and provide empirical evidence that option values are better than actual DCF-based bids in valuing offshore oil leases (Trigeorgis, 1990) values an actual minerals project considered by a major multinational company involving options to cancel during construction, expand production, and abandon for salvage (Kemna, 1993) shares her experiences with Shell in analyzing actual cases involving the timing of developing an offshore oil field, valuing a growth option in a manufacturing venture, and the abandonment decision of a refining production unit (Trigeorgis, 1990) analyzed the assessments of a multinational natural resource project The NPV of the project was negative, but the managers identified these options by the binary option pricing methodology: delay options, abandonment options, and options of conversion scale during the course of the project, concluding that the NPV of the project was positive and the implementation of the project finally succeeded Land Development Many investors want to retain land, waiting for a more favorable opportunity to invest (Titman, 1985) and (Williams, 1991) show that the value of vacant land should reflect not only its value based on its best immediate use (e.g., from constructing a building now) but also its option value if development is delayed and the land is converted into its best alternative use in the future It may thus pay to hold land vacant for its option value even in the presence of currently thriving real estate markets (Quigg, 1993) reports empirical results indicating that option-based land valuation that incorporates the option to wait to develop land provides better approximations of actual market prices In a different context, (McLaughlin & Taggart Jr, 1992) view the opportunity cost of using excess capacity as the change in the value of the firm’s options caused by diverting capacity to an alternative use The Field of Corporate Strategy (Luehrman, 1998) discusses viewing strategy as a portfolio of real options (Keser & Larson, 1984) considered that under the traditional decision-making methods, even the negative NPV projects, so much as there is a long-term strategic value, they may be worthwhile investments In the evaluation of such projects, the real options approach should be used When competitors have the same options, the enterprise should implement options as soon as possible in order to prevent losses (Kulatilaka & Marks, 1988) studied the strategic value of flexibility options They constructed two companies to make comparative studies; the assumptions were that one enterprise can use only a certain technique, while another enterprise has several choices of technology This flexibility option gives the latter a strategic value The Field of R & D Areas Uncertainty and high risk are the main features of R & D projects Real options theory applied to R & D project management has gradually become one of the main trends of research since the 1980s According to the studies of (Morris, Teisberg, & Kolbe, 1991), active management could gradually reduce the risks in the process of investment As more value could be had by the flexibility of management, they suggest choosing the projects which have much more risk when the expected benefits and costs of items are as near as makes no difference (Nichols, 1994) pointed out that the DCF method can not properly assess volatility It often underestimates the investment value of pharmaceutical R&D projects such as science and technology enterprises Merck Company has been using the real options approach in project evaluation The Field of Enterprise Valuation (Chung & Charoenwong, 1991) considered that certain enterprises not need to become involved in investment opportunities if they can recognize the option of future investment as the value of growth opportunities A firm’s value should include the company’s existing internal asset value and the value of the company's future growth opportunities (Kellogg & Charnes, 2000) found that many high-tech biotechnology companies have a high stock price despite having no product revenue because their products are in the early stages of development They use the decision-tree method and binomial-lattice method to value the high-tech company’s share price and found that the real options evaluation methods reflect the high-tech company's early value more accurately (Schwartz & Moon, 2001) apply real options theory and capital budgeting methods to assess the value of Internet companies They established a real options model based on the continuous-time, and estimated model parameters, perform sensitivity analysis, and apply the results to the valuation of technology companies Other Applications Real options can be applied in Flexible Manufacturing The flexibility provided by flexible manufacturing systems, flexible production technology, or other machinery having multiple uses has been analyzed from an options perspective by (Kulatilaka, 1988) Specifically, (Kulatilaka, 1988) values the flexibility provided by an actual dualfuel industrial steam boiler that can switch between alternative energy inputs (natural gas and oil) as their relative prices fluctuate, and finds that the value of this flexibility far exceeds the incremental cost over a rigid, single-fuel alternative In addition, in the field of Foreign Investment, (Baldwin, 1987) discusses various location, timing, and staging options present when firms scan the global marketplace (Kogut & Kulatilaka, 1994) examined entry, capacity, and switching options for firms with multinational operations under exchange rate volatility Various other option applications can be found in areas ranging from shipping to environmental pollution and global warming (e.g ) The potential for future applications itself seems like a growth option C CONCLUSION In this paper, we have summarized the basic techniques and ideas of real options, as it extends the capital budgeting literature beyond the discounted cash flow techniques (DCF) Firms that ignore it will be missing out on value-creating opportunities Moreover, they will find themselves trading these opportunities through asset restructuring with firms that know their true value The knowledgeable firms will use real options to acquire undervalued assets and divest over-valued assets The other side of these trades will be taken by firms that ignore real options analysis, and which will slowly but surely shrink in value However, despite its benefits, we find out that few companies and businesses adopt using Real options in reality because of the lack of top management support; its sophistication and the existing used discounted cash flow There is the beginning of considering the real options theory under incomplete information The theoretical system has developed and its applications are related to many economic fields REFERENCES Amram, M., & Kulatilaka, N (2000) Strategy and shareholder value creation: The real options frontier Journal of Applied Corporate Finance, 13(2), 15 -28 Baldwin, C (1987) Competing for capital in a global environment Midland Corporate Finance Journal, 5(1), 43-64 Block, S (2007) Are “real options” actually used in the real world? 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