Comparative analysis of the discounted flow method and the real options method as approaches to the evaluation of investment projects

The paper analyzes the most common method for evaluating investment projects – the discounted cash flow method in comparison with the method of real options, which to a greater extent takes into account the conditions of uncertainty and risk associated with the implementation of an investment project, especially an innovative, science-intensive one. Such projects are distinguished by a number of specific characteristics inherent only to them: high uncertainty of implementation and results; also in innovative projects, stages in the implementation of the project are more pronounced, within which decisions on subsequent actions, the beginning of the next stage are made based on the results of the completed stage. Real options allow us to assess possible situations in which the decision to continue the project, redirect it or close it depends on the success of the earlier stages. The method allows you to more flexibly and adapt to respond to the uncertainty in which the project operates, as well as to break the decisions made into stages. The method of real options is popular in the world’s best investment management practices.