The ability to change tactical direction in response to new information can contribute significant increments to value. Investments possessing this flexibility have the characteristics of options. Research and development is an obvious example. Oil exploration and mining fall into this category,...

Discounted cash flow is the main tool for valuing projects and companies. Real options techniques can augment valuation. The case of Netscape is used to demonstrate this. We begin with a defensive cash flow scenario. On top of this, we superimpose a number of real options valuations. Some...