{'fraction_non_alphanumeric': 0.016849199663016005, 'fraction_numerical': 0.0, 'mean_word_length': 5.6, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
Multiple Volatility Real Options Approach to Investment Decisions Under Uncertainty

We present a novel multiple volatility real options approach (MVR) to value investment projects with embedded flexibility and affected by multiple uncertainties. A core innovation is the MVR decision tree composed of MVR synthetic tree components, each reflecting a unique binomial process that approximates a geometric Brownian motion of project value induced by one uncertainty source. MVR uses Monte Carlo simulation to generate volatility of project value log-returns arising from each uncertainty source. MVR produces a multidimensional surface, which is hidden in other approaches, representing enhanced net present value (ENPV) as a function of each uncertainty. It allows the impact of each uncertainty’s volatility on ENPV to be measured through three MVR sensitivity analysis levers. To illustrate MVR, it is applied to a real-world investment project, revealing that MVR provides a more accurate valuation than alternative approaches that do not account for separate impacts of each uncertainty. MVR with its greater veracity, provides robust investment decisions through MVR decision rules.