Capitol budgeting decison models

Abstract

The importance of the evaluation of investment is associated with the future profitability, risk and the degree of liquidity of investments. To assess the effectiveness of innovative projects can be applied various methods from traditional approaches to tools that are able to incorporate flexibility, real options. This metod extends the value of a project by supplementing the value of options. The aim of this article is to give a critical view on differences in assumptions between the traditional and real options approach.