![]() ![]() The ROA model was derived from its simile in the theory of financial options by modelling the value of assets as a call or put options, considering that it is applied to investments in assets or real markets, although there is not a tradable market ( Cobb and Charnes, 2004). ![]() To overcome some of these problems, the real options approach (ROA) was developed, which complements the DCF and allows it to include volatility as a fundamental parameter to quantify the risk and collect some elements associated with uncertainty ( Keswani and Shackleton, 2006 Sabet and Heaney, 2017). In academia, the use of discounted cash flow (DCF) as a method used to value capital assets is common, but there are numerous criticisms about its use because it does not include elements such as contingent events, risk present in the cash flows and volatility ( Trigeorgis, 1996). Therefore, different methodological alternatives have been proposed to mitigate this difference, but few consider key factors that generate value, such as those that try to measure and estimate uncertainty through the use of volatility, which usually has been moderately studied and ends up being relevant at the moment of making any type of valuation on a capital asset ( Dixit and Pindyck, 1994 Valencia Herrera and Martínez Gándara, 2009 Álvarez Echeverría et al., 2012). Īuthors such as Trigeorgis (1996), Mun (2002) and Damodaran (2019) recognize there is a difference between the theoretical concepts of valuation of capital assets and their empirical approximation, a discrepancy that is reflected in a gap not deeply explained and with sufficient academic rigour between the market value and its theoretical estimate. The full terms of this licence maybe seen at. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Published in Journal of Economics, Finance and Administrative Science.
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