The article deals with the problem of application the financial options valuation theory into the real options valuation. It consists three parts. The first one presents the methodology background of the financial option valuation models. This part gives the general outlook on the problems which...

We model dynamic investment, financing and default decisions of a firm, which begins its life with a collection of growth options. The firm exercises them optimally over time, and finances the costs of investment by trading off tax benefits of debt with both distress costs and agency costs of...