• 한국신재생에너지학회:학술대회논문집
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• 2005.06a
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• pp.604-604
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• 2005

• Journal of Korea Game Society
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• v.14 no.4
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• pp.67-74
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• 2014

Real options valuation models are now proved as a effective valuation method both in Theoretically and empirically. However, to use real options model for early stage start-ups, additional non-financial information is crucial in the valuation process. Previous studies theoretically suggested the modified real options valuation model and process to use non-financial information in the valuation of early stage startups, but there is no empirical evidence on the suggested model. Therefore, this study investigated the effectiveness of the modified real options valuation model using a case study. The case study result showed that the modified real options valuation effectively reflect the non-financial information in early stage startups, and decrease the forecasting error in the valuation process.

• Journal of Climate Change Research
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• v.3 no.4
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• pp.271-280
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• 2012

The study aims to analyze economic viability of Integrated Gasification Combined Cycle, an innovative technology to utilize clean coal effectively and efficiently in the era of energy crisis. The study is conducted to evaluate business value of 300 MW IGCC demonstration plant technology development based on binomial option, in consideration of uncertainty of fuel price. Binomial option is one of the real option valuation methods, which is ideally suited to irreversible decision making under uncertainty. With this analysis, it shows that investment value is higher compared with economic evaluation based on discounted cash flow, since this method can measure quantity. As a result, this study is proved to be economically feasible, which have a positive impact on the next generation of IGCC and the connection with Carbon Capture and Storage.

• Environmental and Resource Economics Review
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• v.27 no.4
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• pp.613-637
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• 2018

Fuel cell power plant which has advantages as a distributed generation is influenced by high cost of investment and uncertainty of electricity price. This study suggests the model of real options which considers the irreversibility of investment in the fuel cell plant and the uncertainty of electricity price. Most models of real options assume the geometric Brownian motion for convenience, but this study develops the model for the feasibility analysis considering the mean reverting process of electricity price, with the closed form solution on the value of investment option. The result of the empirical analysis considering the data related to the fuel cell generation with the scale of 20MW and the domestic RPS circumstance represents that the investment is feasible without the uncertainty, and is not feasible with the uncertainty. This result implies that the political support as well as the improvement of profit system including revenue and cost are necessary for the activation of the fuel cell power plant.

• Journal of Korea Society of Industrial Information Systems
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• v.16 no.3
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• pp.121-135
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• 2011

We provide an economic evaluation model to help managers make reasonable decision for the investment in the appropriate type of cloud computing. Cloud computing can be classified into public, private and hybrid architecture and we evaluate their attractiveness using traditional NPV and real option methods. We conduct economic analysis by comparing traditional software delivery model with various types of cloud computing. The work compares each mode of cloud computing against each other using passive NPV and dynamic real-option method. For more objective and conservative evaluation of investment alternatives, we eliminate conventional benefits that are often subjective or hard to measure, and count only the reduction of investment cost and maintenance cost as benefit. We argue that hybrid and public cloud computing can be undervalued without their intrinsic options such as abandonment, expansion and contraction.

• Korean Journal of Construction Engineering and Management
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• v.22 no.1
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• pp.90-97
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• 2021

Saemangeum Development is the largest national project in South Korea, which has been developed for an agricultural, economic and tourist area for 30 years from 1987. In order to convert power sources that used to depend on nuclear and thermal power to eco-friendly for carbon reduction, the government plans to construct a 2.1GW floating photovoltaic project by investing 4.6 trillion won, as a public-private project. For success of the Saemangeum floating photovoltaic project, economic feasibility should be checked. This study defined the factors (construction cost, electricity selling price, power generation and maintenance cost) that give a effect to the volatility of the floating photovoltaic payoffs, and analyzed the volatility of payoffs during 20 years operation period. NPV and option value of the project were calculated by applying an option to abandon. According to NPV analysis, it is determined that projects are difficult to invest. But this project has economic feasibility through real options analysis. This study is expected to help decision-makers in the economic analysis of floating photovoltaic projects by using the real options analysis.

• Environmental and Resource Economics Review
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• v.23 no.3
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• pp.435-451
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• 2014

This paper attempts to evaluate an environmental regulation program which enforces installation of filtering equipment to reduce major air pollutants from used diesel vehicles. A real option model is presented to incorporate fuel cost uncertainty and irreversibility of emission-reducing investment. A finite-life option based on finite difference method is developed to consider the limited life expectancy of used vehicles. After taking into account social benefits from emission reduction and costs from decreasing fuel efficiency after the adoption of filtering technology, the result finds overall positive performance of the Pollution Reduction Program. However, the result suggests that the Program be designed to be more specific to vehicle types to improve program performance.

• Journal of Korea Port Economic Association
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• v.38 no.2
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• pp.95-107
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• 2022

Shipping companies earn profits through cargo transportation, and therefore, investment decisions to purchase ships are more important than anything else. Nevertheless, the cash flow discount method was mainly used in the economic analysis method, which assumes that all situations are static. This study shows that the real option model is useful in the economic analysis of ship investment. This economic analysis took into account the irreversibility of investment and uncertainty of benefits. In particular, this study used a binary option price determination model among real options. In addition, the simulation was conducted using actual investment data of A shipping company. As a result of the analysis, the investment value of used ships according to the net present value method was analyzed as negative (-), but the investment value in the real option model reflecting the flexibility of decision-making was evaluated as having positive (+) economic feasibility. It was analyzed that economic feasibility is affected by profit volatility and discount rate. Therefore, this study is expected to help shipping companies make more flexible decisions by using the real option model along with the existing net present value method when making ship investment decisions.

• Korean Journal of Construction Engineering and Management
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• v.11 no.6
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• pp.54-64
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• 2010

A firm decides to go to the project based on its investment analysis. However, the cash flows generated from the real project can not be always coincident with what expected as it follows uncertain behavior and the asymmetric payoff caused by the managerial flexibilities involved in the real asset affects the project value. Amongst various managerial flexibilities entailed in most of the real assets, although investment delay has been known to enhance the project value thanks to its ability to provide new market information to management, the related research to select the time to invest have been just few. Therefore, this research aims to show the theoretical framework to decide when to invest reflecting the behaviors of increasing project value and loss recovery cost due to investment delay with option pricing, related financial economic, and variational theories.

• Information Systems Review
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• v.20 no.4
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• pp.43-57
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• 2018

We propose network effects upon the investment decision of cloud-based ERP. Using the survey data collected from 82 companies in 2015, we examine whether IT managers have an intention to adopt real options in order to manage the risk of cloud-based ERP investments and how the network effects influence upon the intention to adopt real options. Based on prior literature, we propose a research model with 4 hypotheses. We find partial support of the hypotheses from the empirical analysis: technological risks has a positive impact upon the adoption of real options such as defer, contract, and abandon. In contrast, we find no significant impact of security risks upon real options. We validate positive network effects upon the adoption of real options such as defer, contract, and abandon. This work empirically find that IT managers in Korean middle and small sized firms have an intention to adopt real options when the managers realize economic, technological, and relationship risks and when they expect network effects.