This research has three objectives. Our first objective is
to apply real options theory, based on Dixit & Pindyck
[1994] development to value a listed company.
In particular, our intention is to value a company that has
investment projects with delay options, in markets
subjected to competitors random entry. We adopted the
Geometric Brownian Motion to model the market uncertainty.
The uncertainty concerning the competitors entry is assumed
to be described by a Poisson Process. The company we have
chosen is the Companhia Siderúrgica de Tubarão.
The main reason behind our choice is the fact that the
company has publicly announced that it is studying three
big projects for investment.As a second objective, we
intend to apply real option theory to value a high
technology company using the methodology developed by
Schwartz [2000]. In his work,
Schwartz valued Amazon.com taking into account of the fact
that Amazon`s shareholders have limited liability in case
of Amazon`s bankruptcy. Our idea is to adapt Schwartz`s
framework to value Globo Cabo, the Organizações Globo
subsidiary in the business of cable TV, internet and
telecommunications. Our third objective is to study
qualitatively how much real options theory can contribute
to the business valuation process. Our conclusion will take
into account our very limited sample.
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