International investment - Adrian Buckley

The objectives of this study are two-fold. These are: to explore the impact of real operating options upon international capital investment and appraisal; and to meld insights derived from real options analysis into the theory of foreign investment.;The basic approach to investment appraisal is in need of refinement if it is to capture the dimensions of investment strategies in today's business world. Improvements are called for in respect of both international and domestic capital budgeting. Such refinements focus upon three key areas. First is the notion that real operating options endow value. The second is the idea that where the size of a single project may be such that its failure might put the whole corporation in jeopardy, the relevant discount rate would be based upon total risk rather than merely the project's systematic risk. Thirdly, there is the whole question of investment timing to maximize value.;In response to the lack of a fully-fledged, agreed model for international capital budgeting and in the light of apparent shortcomings in existing practices by multinationals, this text uses deductive reasoning to arrive at a model for assessing and appraising value creation in international investment projects.