Corporate Investments

 

Corporate investment decisions are typically decided according to standard techniques as the Discounted Cash Flow analysis. Under these standard techniques, managers are able to incorporate the risk-return trade-off into their analysis, and estimate the potential value created in each project.

 

Real Options Valuation goes beyond the traditional focus on the static risk-return trade-off, while not forgetting it. It extends standard capital budgeting analysis, by including the value of flexibility, the value of the options of the firm. In other words, Real Options Valuation incorporates the flexibility that firms may have as the capacity to change the course of action after seeing future market realizations.

 

We, at Watson & Noble, create value for our clients by applying our expertise in the identification and valuation of the sources of flexibility of corporate investments.

 

Managers have at their disposal several different choices that may increase the value of their firms. For example, firms are allowed to invest in new projects or extend the existent ones; they may initiate staged-investments, introduce new products in the market, or even enter in new markets, still unexplored. At Watson & Noble, we determine the value of each alternative. Our services range from the discounted cash flow analysis and Market Research to the valuation of the flexibility of each corporate investment of our clients. We help our clients to determine the accurate value of their investment projects, to decide which investments are worth the risks, and to plan the scale of investment.