We provide a general valuation approach for capital budgeting decisions involving the modularization in the design of a system. Within the framework developed by Baldwin and Clark (2000), we implement a valuation approach using a numerical procedure based on the Least Squares Monte Carlo method proposed by Longstaff and Schwartz (2001). The approach is accurate, general and flexible.

Valuing Modularity as a Real Option

GAMBA, Andrea;
2009-01-01

Abstract

We provide a general valuation approach for capital budgeting decisions involving the modularization in the design of a system. Within the framework developed by Baldwin and Clark (2000), we implement a valuation approach using a numerical procedure based on the Least Squares Monte Carlo method proposed by Longstaff and Schwartz (2001). The approach is accurate, general and flexible.
2009
real options; modularity; least-squares Monte Carlo
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11562/333263
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