Fan and Zhu (2010) propose a real options framework to value oil exploration projects in the presence
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Fan and Zhu (2010) propose a real options framework to value oil exploration projects in the presence of three sources of uncertainty: the overseas investment environment, the exchange rate and the oil price. Explain how the real options methodology can aid in investment evaluation for these types of projects.
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ANSWER Real options methodology is an approach used in investment valuation that extends traditional discounted cash flow DCF methods to account for managerial flexibility in decisionmaking under unce...View the full answer
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Corporate Finance
ISBN: 9780077173630
3rd Edition
Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe
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