Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )

Toprovideacontrast,thenetpresentvalueofthisprojectis only $547 million. Thetime premiumof$360 milliononthis option($907 − $547)s ...

Basedonthisanalysis,ifnothingchanges,wewouldexpect Avonextobeworthmoreasacommercialproductthanasa patent nineyears fromnow,which ...

Theexpectedvalueof any patentsthat thefirmcanbe expectedtogenerateinfutureperiodsfromnewpatentsthatit might obtain as a result ...

separately and allows for the option component of value explicitly. Thebiggest limitationof the option-basedapproach is the info ...

thevalueofanundevelopedreserveandthenconsiderhow wecanextendthistolookatnaturalresourcecompaniesthat have both developed and und ...

Thus,theinvestmentinanaturalresourceoptionhasapayoff function similar to a call option. Inputs for Valuing a Natural Resource Op ...

capacityoutputrate,aswellasestimatesofthenumberof years itwouldtake toexhaust theinventory.Thus,a gold minewithareserveof 3 mill ...

thelossofcashflowsduringthedevelopmentperiod.Thus,if thereisaone-yearlagindevelopmentandwecanestimate thecashflowwewouldmakeover ...

Riskless rate = 8% Basedontheseinputs,theBlack-Scholesmodelprovidesthe following values. Thisoilreserve,thoughnotviableatcurrent ...

option. A purist would probably disagree, arguing that valuinganoptiononaportfolioofassets(asinthisapproach) willprovidealowerva ...

ofitsundevelopedreserves.Again,thecostsmightbe higherforsomereservesthanforothers,andwecan use a weighted average cost. Life of ...

barrels of oil and the average cost of developing these reservesatthattimewasestimatedtobe$30.38billion(the development lagisapp ...

Thisstandsincontrasttothediscountedcashflowvalueof $12billionthatweobtainbytakingthedifferencebetween thepresentvalueofthecashfl ...

ThisanalysiswouldsuggestthatGulfOilwasovervaluedat $70 per share. Value of Flexibility Inrecentyears,therehavebeencritiquesofdis ...

future.Assessedtoday,theexpectedpresentvalueofthecash flowsfrominvestinginthefutureprojectisVandthetotal investmentneededforthis ...

project.Itisthesecondprojectthatrepresentstheunderlying asset for the option. The inputs have to be defined accordingly. Thepre ...

As withother realoptions, theremaybe acost to waitingonce theexpansionoptionbecomesviable. Thatcostmaytaketheformofcashflowstha ...

Atfirstsight,investinginapoorprojecttogetachanceto investinanevenpoorerprojectmayseemlikeabaddeal,but thesecondinvestmentdoeshav ...

Personneldecisions(managementhastobehiredand put in place). Based onthese inputs,we had thefollowinginputs to the option prici ...

Usingthereplicating portfolio framework,weestimate the valueoftheexpansionoptiontobe$203million.Thisvalue canbeaddedtothenetpres ...