Valuation Tools for Determining the Value of Assets: A Literature Review
The scope of this paper is to present a literature review upon the historical evolution of the tools and methods used for valuation tools where risk and uncertainty are considered, as these features have significant impact on the value of the investment. This article aims to review the literature behind the valuation theory and to foster a debate on the existing gap between current financial and real option methods used for corporate value measurement. In this paper, different valuation models are addressed along with discussions based on applicability and constraints. This paper divided the valuation approach to traditional and modern valuation approach based on the applicability of the methods. Additionally, this paper discusses the gaps between finance theory and strategic planning. This article concludes that by integrating theoretical requirements for modeling, risk and uncertainty, the path from financial based option theory to real option pricing theory could be adjusted.