Problem:
Mr. Doe is considering investing some money in the new high-tech venture. One relatively new valuation is methods employed something known as "real options." Real options theory originates in the theory about how stock options are priced, but extends options pricing theory to a wide variety of situations including valuation of new ventures. Mr. Doe heard that "real options" is the best approach for valuation of a new high-tech venture.
Do you agree or disagree that real options is the best approach for valuation of a new high-tech venture? What would you recommend Mr. Doe?