Campus Only Senior Thesis
Bachelor of Arts
© 2012 Max Brennan
This paper examines the theoretical applicability and empirical rates of use for real options valuation and planning techniques. In theory, real options are the best valuation and planning tool for a biotechnology start-up, primarily due to the staged nature of investments and the discrete changes in probability between FDA approval stages. However, in a survey of 48 members of the Biotechnology Industry Association, results showed a low level of real options implementation. This paper then examines the possible reasons for the lack of implementation of real options and possible solutions, with the most popular surveyed reason being a lack of knowledge of the technique.
Brennan, Max, "The Use of Real Options in Biotechnology Capital Budgeting: Theory and Practice" (2012). CMC Senior Theses. 523.
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