Abstract

The value of managerial flexibility appears to play a pivotal role nowadays, given the transition nature of Latvian economy. Overall aim of the research is to carry out Real Options Valuation (ROV) based on Scenario Planning, thereby identifying value maximizing decisions regarding the Business Unit of the Latvian Company. Having combined Scenario planning with Monte Carlo simulation and Risk-Neutral Probability-based ROV with alternative strategies of Company, authors provided a solution to the company's problem at hand. The flow chart of ROV application has been created which would be a useful “road map” for Latvian practitioners in time of economic uncertainties.

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