The risk that projects contain differ between projects. The frequency and quantity of risk depend on the content of the project and the risk characteristics. Furthermore, owing to these risks, projects have the possibility of default. This paper will evaluate project-generated cash flow and the value of each property according to the risks involved. We propose a method to evaluate the value of projects that have default risk, to explain the relationship between these project risks and default risk and to establish a structural model to in order to evaluate this risk. We consider this model a framework that may able to be applied to analyze feasibility and risk in various projects.
Due to the growing demand and increase in size of LNG (Liquefied Natural Gas) tankers throughout the world, increasing demand for larger size specific alloy membrane made of so called Invar (specific alloy of iron and nickel with extremely low thermal coefficient of expansion) is expected. Two major producers compete in a large scale Invar membrane business, as a leader and a follower, both having distinctive options for production line expansion in the future. Optimum strategies both for leader as well as follower in such a competitive duopoly condition have been derived based on real options analysis combined with game theory.
This paper investigates the equilibrium investment policies of two different firms under consumers’ preference uncertainty. The incumbent firm, which owns a superior old technology, produces merchandise that can satisfy current consumers at the beginning of the investment game. The startup firm, which possesses an inferior old technology, does not capture the consumers satisfaction but it has a possibility to cultivate a new technology that can attract the consumers in the future if the customers’ preference is changed. We consider two types of equilibria in our valuation model. The first one is a price equilibrium at each time derived from the Bertrand competition. To represent customers’ diversity and products differentiation we use a discrete choice model. The other one is a Markov perfect equilibrium where each firm can invest either in the old technology or in the new technology depending on customers’ preference, which is modeled as a Markov process.