New approaches to companies valuation. Application of options methodology to a chilean freight company

Abstract

Several studies consider as the shares of a company as a call option over the assets. Based on that, in this study we determine the value of a Chilean freight company by application of Options Methodology. The options considered the contribution of the flexibility in the assessment so that it fits uncertain environments. Further the uncertainly value was incorporated by Geometric Brownian Motion and Montecarlo simulation. Preliminary and for comparison, the company was valued by Discounted Cash Flow (DCF). It was established that the Options Methodology used to assess companies generates additional value due to the risk impact over the share’s value.