Introducing students to the real option approach to capital budgeting

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Introducing students to the real option approach to capital budgeting

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Title: Introducing students to the real option approach to capital budgeting
Author/Artist: Lander, Diane M.
Pettengill, Glenn N.
Date: 2003
Abstract/Description: The real option approach to capital budgeting has gained acceptance in the business community and is now addressed in Financial Management textbooks and Corporate Finance courses. Real option valuation can be a challenge for both students and instructors. Using two real options examples, a Black-Scholes growth (call) option and a binomial abandonment (put) option, we discuss possible student questions and areas of confusion, potential teaching issues, and basic connections the instructor may need to help students make. We conclude by providing suggestions and a list of resources for facilitating student learning.

A revised version of this paper has since been published in the Journal of the Academy of Business Education. Please use this version in your citations.
Description: Author's Original
Subject: finance pedagogy
real options
capital budgeting
Citation Link: http://hdl.handle.net/10474/1678
APA Citation: Lander, D.M. and Pettengill, G.N. 2007. Introducing Students to the Real Option Approach to Capital Budgeting. Journal of the Academy of Business Education, 8, 49-60

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