Projects Rating for Business with Real Options Theory - Case ENERSUR S.A.

Abstract

The present research aimed to use the approach of the Real Options Theory for Project Valuation and compare it with the Traditional Methods applied on the Enterprise ENERSUR Ltd. The premise which was considered forthe assessment of the project was generated on a basis of four options: deferring, abandoning, expanding, and contracting. For the option to defer, resultsreported that the time would be a year. The option to abandon depends on sales, liquidation or the closure of the project. The option to expand reports a growth of 30%, and the option to contract proposes to reassign idle facilities after 2.4 years. The Real Options Theory compared to traditional methodsfor Project Valuation demonstrated a greater effectivenessin decision-making, decisionsthat can be taken during the life of aninvestment project.