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