Abstract
The ability to make foreign acquisitions, especially into emerging markets, is now a core corporate skill. The quality of appraisals is a key part of this. We argue that foreign emerging market investment appraisal is often best carried out using a real options framework and structured as a series of investment options. The track record of foreign investment in practice has often been dismal. This is because emerging markets appraisals involve additional risks and far more complexity, so that valuing these investment proposals via conventional discounted cash flow approach is problematic. The core of the article is a case study, which recreates an investment in cinemas in Argentina, and serves as useful practical illustration of the use of real option in foreign investment appraisal. JEL classification: F36, F37, G12, G15, G34
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