The use of real options when implementing high risk projects, for example, steel companies

Sergej A.Filin, Elmira E.Zhusipova, Aleksej Y.Zhanovich, Ekaterina E.Kolesnik, Gulshat A.Zhadigerova

Abstract

The subject of research in the article is the process of evaluating the effectiveness of insurance of high-risk projects using real options embedded in them on the example of metallurgical companies. The goal is to clarify the formula for calculating the expected effect of the project implementation using real options built into it. The research hypothesis is that using a more objective calculation formula will allow you to use the additional features contained in them and increase the effectiveness of project insurance. Methods of mathematical modeling, discounting cash flows and real options were used. It is shown that taking into account the cost of real options built into the project and additional long-term costs associated with their use in the formula, and reducing the overall risk of the project, makes it possible to increase the objectivity of the corresponding calculations. The novelty of the article is to systematize the main types of real options for projects of metallurgical companies and clarify the calculation of the expected effect of the project implementation in conditions of risk and uncertainty using real options built into it. The proposed systematization allows you to expand the range of application of management decisions. The application of a more objective formula for calculating the expected effect of the project implementation using real options built into it (with restrictions – only for real assets as basic ones) confirms the hypothesis put forward.

Keywords: real option, metallurgical company, valuation, investment project, strategic goal.

Cite

Филин С.А., Жусипова Э.Е., Якушев А.Ж., Колесник Е.Е., Жадигерова Г.А. Использование реальных опционов при реализации высокорисковых проектов на при- мере металлургических компаний // Экономика: стратегия и практика. — 2020 — № 3 (15) — С. 83-95.