Real Options Approach asa Modern Mechanism toraise the Efficiency of Financial Evaluation of Projects andrationalize Investment Decisions. –A Study of a Project to Develop a Nitrogen Protoxide Production Unit at the Lind Gaz Company ofOuargla

Abstract

This study aims to demonstrate the contents of the real options approach as an effective decision-making mechanism and judging the financial feasibility of investment projects. Accordingly, the elements of risk and uncertainty were included in the financial evaluation process for the project of developing a unit for the production of nitrogen peroxide in Lind Gas in Ouargla, based on the analysis of real options, with the use of real options sls program to reveal the project’s real value, and to maximize the investment decision taken’s value. The findings revealed that adopting the real options approach in the evaluation does not only achieve a positive present value as the case with the traditional standard adopted in the evaluation, but imparts a positive financial value to the investment representing flexibility value’s, as well as revealing the financial risks facing the project. It is the added value of this entry in project evaluation and investment decisions making’s field.