Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
While the argument that some or many investments have valuablestrategicorexpansionoptionsembeddedinthemhas greatallure,thereisad ...
Is the first investment a prerequisite for the later investment/expansion? If not, how necessary is the first investmentforthel ...
by these cash flows. The greater the potential for excess returnsonthesecondinvestment,thegreaterthevalueofthe expansionoption i ...
competitiveadvantagecomesfrombeingthefirstmoverina marketorfromhavingtechnologicalexpertise,itwillcome underassaultfar sooner.Th ...
expansionoptioncannotexceed$2billion,thevalueofthe expansion option drops to $142 million. 16 Valuing a Firm with the Option to ...
businesseswithlower returns(suchashousing,utilities, or automobile production). Again,though,wehavetobecarefulnottodoublecountth ...
Thereissubstantialuncertaintyaboutfuturegrowthinonline retailinginIndiaandtheoverallperformanceoftheIndian economy.Iftheeconomyb ...
brand name and the visitors to its portal to establish competitive advantages. ThevalueofRediff.comasafirmcannowbeestimatedas th ...
illustrate,assumethatVistheremainingvalueonaprojectif itcontinuestotheendofitslifeandListheliquidationor abandonmentvalueforthes ...
forajointventure.Eachfirmwillinvest$500millioninthe joint venture and produce the planes. The investment is expected to have a 3 ...
Sincethisisgreaterthanthenegativenetpresentvalueofthe investment,Airbusshouldenterintothisjointventure.Lear, however,needstobeab ...
Reconciling Discounted Cash Flow and Real Option Valuations Whydoesaninvestmentsometimeshavehighervaluewhen wevalueitusingreal-o ...
thereal-options approach,weuse areplicating portfolioto computevalue.Inthedecisiontreeapproach,weusethecost ofcapitalfortheproje ...
multipleproductlinesaswellasthecostofcapitalforafirm. Wepresentedanumberofdifferentwaysofassessingbrand namevalue,butacautionary ...
contrast,thevalueoftheassetisgreaterthanthestrikeprice, theoptionisexercised—thebuyeroftheoptionbuystheasset (stock)attheexercis ...
theprice of theunderlying asset is greater thanthe strike price, the option will not be exercised and will expire worthless.If,i ...
1.Currentvalueofunderlyingasset.Optionsareassetsthat derivevaluefromanunderlyingasset.Consequently,changes in thevalue oftheunde ...
dividends on the stock in subsequent periods. Failing to exercise the option will mean that these dividends are forgone. 4.Strik ...
TABLEA12.1SummaryofVariablesAffectingCallandPut Prices Effect On Factor Call Value Put Value Increase in underlying asset’s valu ...
While early exercise is not optimal generally, there are at least two exceptions to this rule. One is a case where the underlyin ...
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