International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Upgrading Corporate Equipment as an Asian Real Option with Constant Business Volatility
Yuriy V. Trifonov, Sergey N. Yashin, Egor V. Koshelev

A method for handling the problem of financial mission statement has been suggested to evaluate effects of pro-jected upgrading equipment of a manufacturing company. For this end, such project is analyzed as an Asian real option with constant business volatility. The problem is solved using the Black-Scholes model, a refined and mod-ified binomial model and a modified trinomial model. It has been demonstrated that the most accurate valuation of the option and the entire project in general is provided by the trinomial model.

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