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We determine the optimal timing for replacement of an emerging technology facing uncertainty in both the output price and the arrival of new versions. Via a sequential investment framework, we determine the value of the investment opportunity, the value of the project, and the optimal investment...
Persistent link: https://www.econbiz.de/10011097071
The relationship between uncertainty and managerial flexibility is particularly crucial in addressing capital projects. We consider a firm that can invest in a project in either a single (lumpy investment) or multiple stages (stepwise investment) under price uncertainty and has discretion over...
Persistent link: https://www.econbiz.de/10011167257