Bakgrund: Länge har paybackmetoden, nettonuvärdesmetoden och andra diskonteringsmetoder haft en ledande ställning när företag gör sina investeringsbedömningar. Metoderna har fått kritik för att inte ta hänsyn till beslutsfattarnas flexibilitet och på så sätt underskatta värdet av en investering. Syfte: Syftet med uppsatsen är att utreda i vilken utsträckning svenska företag använder sig av reala optioner och förklara varför metoden inte används i större utsträckning. Vidare syftar uppsatsen till att förklara varför användningen skiljer sig mellan USA och Sverige. Ytterligare ett syfte är att undersöka vilka kapitalbudgeteringsmetoder som används i Sverige idag . Metod: I uppsatsen har främst en kvantitativ metod använts i form av en enkätundersökning. Metoden kompletterades senare med den kvalitativa metoden, då i form av en intervju med en användare av reala optioner. Slutsatser: Payback- och DCF-metoden dominerar fortfarande bland de svenska företagen. Enkätundersökningen fann en användare av reala optioner. Resterande företag är nöjda med sina metoder och anser att reala optioner är en komplicerad metod som inte kan tillföra värde till företaget. / Background: When it comes to investment decisions the most frequently used methods are payback and the net present value model. These methods have been criticized for not taking decision makers flexibility into account and thus underestimate the value of an investment. Aim: The purpose of this paper is to investigate to what extent Swedish companies use real options and explain why the method is not used more widely. Furthermore, the study tries to explain why the use of real options differs between U.S. and Sweden. Another purpose is to examine what capital budgeting methods are used in Sweden today. Method: The mainly used method is the quantitative method in form of a survey. This method has been supplemented with the qualitative method, in form of an interview with one user of real options. Conclusions: The payback and DCF method is still predominant among Swedish companies. The survey found one user of real options. All other companies are satisfied with their used method and do not believe that real options can add more value.

In recent years, the use of option pricing models to support IT investment decisions has been proposed in the MIS literature. In this paper, we discuss the practical advantages of such techniques for the selection of a software platform. First, we argue that traditional quantitative approaches to a cost-benefit analysis give only a partial picture of such decision situations: due to the long planning horizon required because of the time-consuming and resource-intensive implementation process, it is not possible to exactly predict which applications will, in fact, run on the system over time. Thus, the investor is faced with the problem of valuing "implementation opportunities". We then compare different valuation techniques for this task and discuss their respective advantages and drawbacks. The practical advantages of employing such models are demonstrated by describing a real-life case study where option pricing models were used for deciding whether to continue employing SAP R/2 or to switch to SAP R/3. (author's abstract) / Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"

We compare the use of stochastic dynamic programming (SDP), Neural Networks and a simple approximation rule for calculating the real option value of a flexible production system. While SDP yields the best solution to the problem, it is computationally prohibitive for larger settings. We test two approximations of the value function and show that the results are comparable to those obtained via SDP. These methods have the advantage of a high computational performance and of no restrictions on the type of process used. Our approach is not only useful for supporting large investment decisions, but it can also be applied in the case of routine decisions like the determination of the production program when stochastic profit margins occur. (author's abstract) / Series: Working Papers SFB "Adaptive Information Systems and Modelling in Economics and Management Science"

The optimal replacement policy for an asset subject to a stochastic deteriorating operating cost is determined for three different tax depreciation schedules and a known re-investment cost, as the solution to a two-factor model using a quasi-analytical method. We find that tax depreciation exerts a critical influence over the replacement policy by lowering the operating cost thresholds. Although typically a decline in the corporate tax rate, increase in any initial capital allowance, or decrease in the depreciation lifetime (increase in depreciation rate) results in a lower operating cost threshold which justifies replacing older equipment, these results are not universal, and indeed for younger age assets the result may be the opposite. An accelerating depreciation schedule may incentivize early replacement in a deterministic context, but not necessarily for an environment of uncertainty.

Diss. Stockholm : Handelshögskolan, 2003.

Thesis (MScEng)--Stellenbosch University, 2012. / ENGLISH ABSTRACT: This study explores the implementation of an integrated capital budgeting visual mapping framework comprised of both Discounted Cash Flow (DCF) and Real Options Analysis (ROA) techniques. Physical asset investment decisions are based largely on rigid discounted cash flow tools which provide untimely and incomplete decisional criteria. While literature outlines the wide spread use of traditional DCF techniques, it very openly reveals large limitations, including its static inflexibility and slow to evolve framework. ROA is a more recent valuation tool based on stock option theory. It brings into account added value found in the flexibility of managerial decision making and uncertain conditions. This study implements a combined DCF and ROA capital budgeting tool within a Physical Asset Management (PAM) environment. The validity of the framework is realised through an industry relevant case study presented by a South African mining company. / AFRIKAANSE OPSOMMING: Hierdie tesis ondersoek die toepassing van ’n geïntegreerde visuele kapitaalbegrotingafbeeldingsraamwerk wat uit verdiskonteerde kontantvloei en reële opsie–analise bestaan. Fisiese batebeleggingsbesluite is dikwels gebaseer op rigiede kapitaalbegrotingstegnieke wat onvolledige besluitnemingsmaatstawwe aanbied. Terwyl literatuur die wydverspreide uiteensetting van verdiskonteerde kontantvloei openbaar, is daar nog steeds baie beperkings, soos die onbuigsaamheid en die stadige ontwikkelingstempo van verdiskonteerde kontantvloei– analise. Reële opsie–analise is ’n meer onlangse waardasiemetode wat op aandelemarkfinansies gebaseer is. Reële opsies word addisionele waarde bygevoeg deur die onsekerheid en buigsaamheid van fisiese batebeleggings. Hierde tesis implimenteer ’n gekombineerde verdiskonteerde kontantvloei en reële–opsie kapitaalbegrotingmetode binne ’n fisiese batebestuur omgewing. Die geldigheid van die gekombineerde metode is getoets met behulp van ’n gevallstudie beskikbaar gestel deur ’n Suid Afrikaanse myn.

Em finanças corporativas e em análises tradicionais de projetos, os modelos de fluxo de caixa descontado têm prevalecido como a estrutura básica para a grande maioria das análises de geração de valor para as empresas. A evolução da teoria de precificação de opções, contudo, adicionou às teorias e práticas usuais de finanças um novo conjunto de ferramentas necessárias para gerenciar e explorar o valor advindo da incerteza e da volatilidade, que ampliam os parâmetros da geração de valor ao acrescentarem os conceitos da flexibilidade gerencial. Dentro deste contexto, o presente trabalho buscou pesquisar e apresentar a metodologia de avaliação de investimentos em ativos reais com base na teoria de precificação de opções ("opções reais"), suas características, limitações e aplicações em ambientes empresariais caracterizados pela alta volatilidade econômica. Neste sentido, a pesquisa inicia-se com a revisão bibliográfica das diversas teorias utilizadas para a avaliação de projetos de investimento, visando apresentá-las desde sua forma mais básica até os principais métodos mais sofisticados e recentes, cujo escopo incorpora conceitos como o valor do dinheiro no tempo e risco. Finalmente, a título de se demonstrar a aplicabilidade dos métodos apresentados, um exercício teórico simulando um caso real é desenvolvido, levando em consideração um ambiente considerado de grande volatilidade, analisando-se as oportunidades que a metodologia de opções reais pode proporcionar. Como resultado desse trabalho, conclui-se que a análise de opções reais pode ser uma alternativa viável e preferencial às metodologias tradicionais, quando inserida num ambiente de grandes incertezas e flexibilidade gerencial, tal como o ambiente geral que caracteriza a América Latina. / In corporate finance and traditional capital budgeting, discounted cash flow methods have prevailed as the basic structure in most approaches to investment and shareholder value analysis. The evolution of the option pricing theory, however, has added a whole new set of tools to the traditional group of theories and practices, necessary to the good management and exploitation of the value from uncertainty and volatility. These tools broaden the value generation parameters by adding the managerial flexibility and uncertainty concepts. Amid this overall context, the present work has tried to research and present the real asset investment analysis methodology based on the option pricing theory (real options), its characteristics, limitations and applications in business environments characterized by high economic volatility. Therefore, this study begins with the review of several theories used in capital budgeting, aiming to present them from their most basic form, up to the main, most sophisticated and recent methods, which include concepts like time value of the money and risk. Finally, in order to demonstrate the applicability of the methods discussed, a theoretical exercise, which simulates a real case, is developed, considering an environment of high volatility, analyzing the opportunities that the real options theory may grant. As a result of this study, it is concluded that the real options analysis may be a viable and preferable alternative if compared to traditional methodologies, when used in an uncertain environment, in association with managerial flexibility, like the general environment that characterizes the Latin America region.

A review of the normative literature, in the field of Information Technology (IT)/ Information System (IS) justification, examines how organisations evaluate their investments in Manufacturing Resource Planning (MRPII). This is achieved through investigating the issues surrounding capital budgeting, with a particular focus on investment appraisal. In doing so, a novel taxonomy of generic appraisal techniques is proposed. This taxonomy identifies a number of methods for appraising MRPII investments, and through describing these techniques, a classification is offered that identifies their respective characteristics and limitations. In doing so, it becomes clear that although many of the benefits and savings resulting from MRPII are suitable for inclusion within traditional accountancy frameworks, it is their intangible and non-financial nature, together with a range of indirect project costs that confuse the justification process. These factors, together with a range of human and organisational implications, that further complicate the decision making process are also identified. Hence, it appears through a critical review of the literature that many companies are unable to assess the implications of their MRPII investments, thus amounting to a myopic appraisal process that focuses on the analysis of those benefits and costs that are financially quantifiable. In acknowledging the limitations of traditional appraisal techniques, a conceptual model for IT/IS investment evaluation is proposed, which is underpinned by research hypotheses. To test the validity of the proposed hypotheses, a robust novel research methodology is then developed. In doing so, an interpretivist stance is adopted, which favours the use of qualitative research methods during a multiple case enquiry. Whilst conducting the empirical research, it soon emerged that the hypotheses represented significant factors for consideration within the presented model. As a result, such constructs now establish themselves as integral parts within a structured evaluation process. However, during the empirical research, complementary evaluation criteria also emerged, which resulted in modifications being made to the previously presented conceptual model. In doing so, culminating in the development of descriptive MRPII evaluation criteria and a model, which provides investment decision makers with novel frames of reference during the evaluation of MRPII investment proposals.

Capital budgeting is one of the most crucial organisational tools for executing operational, business and corporate strategy. Manufacturing companies derive their profits from fixed assets that also deteriorate over time. This requires them to invest large amounts of capital to both maintain and expand their asset base. A number of studies both historic and recent produce conflicting results on the relationship between capital budgeting practices and financial performance.This study sets out to identify the current capital budgeting practices in the manufacturing/capital intensive companies operating in the South African environment, and determine the relationship between the financial performance and capital budgeting practices. The implications of the type of capital expenditure (i.e. maintenance and expansionary) are also discussed.The study was completed using primary and secondary data. Primary data consisted of capital budgeting practices data in some of the private and state-owned enterprises that was source using a survey questionnaire. The secondary data was sourced from financial statements on the McGregor BFA® database.The major finding of this research study was that, given the sufficient sub-sector analysis, there is a positive relationship between capital budgeting practices and financial performance. There were no specific individual practices that yielded significantly returns. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / unrestricted

Bakgrund och problem: Många universitetsorter i Sverige lider av bostadsbrist gällande studentbostäder och utöver detta tycker många fastighetsbolag att det är problematiskt att generera lönsamhet i studentbostadsprojekt. Detta är en studie som undersöker ”problemet” med studentbostäder. Det har identifierats att många bostadsbolag i Sverige tycker att det är svårt att generera lönsamhet i nybyggda studentbostäder. Studien kommer redogöra för vad bostadsbolag anser vara de kritiska faktorerna för att uppnå lönsamhet vid nybyggda studentbostäder och hur dessa bolag opererar för att nå en tillfredsställande avkastning. Syfte: Uppsatsens övergripande syfte är att undersöka varför det är svårt att uppnå lönsamhet i nybyggnationen av studentbostäder i Sverige. Studien kommer även identifiera vilka faktorer som påverkar lönsamhet i det studerade ämnet. Metod: Författarna har genomfört en kvalitativ fallstudie som bygger på semistrukturerade intervjuer med fem bostadsbolag på olika orter i Sverige. Företagen har valts ut för att de är stora aktörer på sin respektive ort som har stor insyn i studentbostadsmarknaden. Studien använder en abduktiv ansats. Slutsats: Det finns inte någon enskild kritisk faktor som skapar lönsamhet i projekt utan det krävs en noggrann avvägning mellan flera faktorer för att lyckas. Förutom att målgruppen (studenter) är en väldigt betalningssvag grupp har studien identifierat ett antal kritiska faktorer som spelar stor roll på lönsamhet hos studentbostäder iSverige. Användandet av diskonteringsmetoder är viktigt för att göra en bra bedömning av investeringar i studentbostäder. Det statliga investeringsstödet är i flera fall avgörande för att få investeringskalkylerna att gå ihop. Studien finner att ränteläget idag är fördelaktigt för att investera, även om avkastningskrav behöver vara hållbara på sikt. Utöver det ökar byggkostnaden per m² och driftkostnader med små studentbostäder. Slutligen gör den stora bostadsbristen i Sverige att flera företag inte använder sig av omfattande känslighetsanalyser men vikten av riskanalyser ökar med att bristen på bostäder minskar. / Background: Many cities with universities in Sweden are experiencing a shortage of student housing and at the same time many property builders have a hard time achieving profitability when building student housing. This thesis studies the problem with student housing. Many real estate companies have expressed that they have a hard time achieving profitability in newly built student accommodation. This study will make clear for what property builders think are the most important factors when building as well as how these companies work to reach a satisfying yield on their investments when building student accommodation. Purpose: The purpose of this thesis is to study why it is hard to achieve profitability in newly constructed student accommodation in Sweden. This thesis will also identify which factors that affect profitability in the chosen subject. Method: The authors have done a qualitative case study built on semi-structured interviews with five different property owners in different cities in Sweden. The companies have been chosen because they are well established at their respective city and have knowledge and experience within student housing. This study uses an abductive approach. Conclusion: This thesis concludes in that there is no single factor that leads to profitability in student housing projects but rather that a careful balance between several factors are needed to succeed. Except that students are a low incomedemographic with a low willingness to pay, the study has found several critical factors that affect profitability in building student housing. The use of discount methods is important when it comes to capital budgeting as well as the governmental investment subsidy put in place by the government. The investment subsidy is in many cases important to be able to achieve profitability in certain projects. The current interest rate makes borrowing money which facilitates investments even if an investments yield has to be sustainable over a longer period of time. Furthermore building costs increase per m² when building smaller apartments such as student accommodation. Lastly, the large shortage of housing in Sweden leads to that many companies disregard using a sensitivity analysis in projects but the importance of risk analysis increases with the increased availability of housing.