Real Option Analysis on Ship Investment Valuation

• 발행기관: 한국항해항만학회
• 저자명: Chi-Yeol Kim Dong-Keun Ryoo Jae-Kwam Kim
• 간행물 정보: 『한국항해항만학회지』제33권 제7호, 469~476쪽, 전체 8쪽
• 주제분류: 공학 > 해양공학
• 파일형태: PDF
• 발행일자: 2009.09.30

영문 초록

Recent collapse of shipping market right after unprecedent surge clearly demonstrates that shipping industry is extremely risky. Due to the volatile movements of the freight rates, investors tend to ask higher rate of return; higher required return reduces the total net present value of the investment project. For several decades, the Discounted Cash Flow(DCF hereafter) analysis has been the most frequently used valuation technique. However, the main problem of the DCF analysis is its assumption that the discount rate would stay the same during the project life. In other words, it usually does not address the decisions that managers have after a project has been accepted. The purpose of this study is investigate a new valuation method of investment: the Real Option Analysis(ROA hereafter) on ship investment. By replacing the existing valuation methods with the new one, the research will present a new perspective on investment with uncertainty. While uncertainty increases risk of investment and consequently discounts the value of it in the traditional feasibility analysis, in the ROA, a new valuation method which will be addressed in the research. uncertainty means some additional value of flexibility so that the tool am help investors produce more accurate decisions. Contrary to the DCF analysis, the ROA takes managerial flexibilities into account. In reality, capital budgeting and project management is typically dynamic, rather than static in nature. The ROA finds and assesses the values of managerial flexibilities or real options in the investments. The main structures of the research will be as follows: (1) overview of the ship investment project, (2) evaluation of the project by the Net Present Value analysis, (3) evaluation of the same project by the Real Option Analysis, (4) comparision of the two techniques.

목차

1. Overview of the research

2. Theoretical backgrounds

3. Real option approach to investment underuncertainty

4. Empirical study

5. Conclusion

키워드

Real Option Analysis Discounted Cash Flow Ship Investment Managerial Flexibility Uncertainty