Real options
Taught by Nick Drape · AI tutor support included
You'll learn what real options are and why experienced leaders sometimes make investment decisions that contradict the numbers.
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In this lesson
- 0:00 Real Options Introduction
- 1:00 Four Classic Decision Making Tools
- 3:57 Why Net Present Value Is Best
- 4:50 Understanding Real Options Framework
- 5:02 Growth Option Explained
- 5:21 Option To Follow On
- 6:40 Option To Delay
- 7:19 Option To Abandon
- 8:08 Martin's Consulting Case Study
About this lesson
Real options help explain the strategic value hidden in projects that show negative NPV—like investing in growth opportunities, gaining technological capabilities for future use, waiting for better conditions, or building in exit clauses. In this lesson, you'll explore four types of real options (growth, follow-on, delay, and abandon) and practise identifying them in exam scenarios, so you can understand the full picture when evaluating capital investment decisions.
Duration: 11m
Transcript
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