ECONOMIC ANALYSIS OF R&D PROJECTS: AN OPTIONS APPROACH.

Focuses on the use of options approach in research and development project valuation which permits a flexible assessment of the growth opportunities in the entire process. Information on the application of the traditional discounted cash flow method; Appropriateness of the options approach in the world of uncertainty; Details on the development of a valuation model that incorporates the risk-free arbitrage features of a binomial pricing model into a decision free framework.