Principles of Corporate Finance_ 12th Edition

572 Part Six Options bre44380_ch21_547-572.indd 572 10/05/15 12:53 PM Year Interest Rate Market Return Dividend Yield Year Inter ...

● ● ● 573 bre44380_ch22_573-596.indd 573 09/30/15 12:08 PM Part 6 Options W hen you use discounted cash flow (DCF) to value a pr ...

574 Part Six Options bre44380_ch22_573-596.indd 574 09/30/15 12:08 PM The Mark I’s forecasted cash flows and NPV are shown in Ta ...

Chapter 22 Real Options 575 bre44380_ch22_573-596.indd 575 09/30/15 12:08 PM Answer: With traded call options, you can see the v ...

576 Part Six Options bre44380_ch22_573-596.indd 576 09/30/15 12:08 PM Answer: We recommend you look for comparables, that is, tr ...

Chapter 22 Real Options 577 bre44380_ch22_573-596.indd 577 09/30/15 12:08 PM Of course we haven’t counted other follow-on opport ...

578 Part Six Options bre44380_ch22_573-596.indd 578 09/30/15 12:08 PM must be zero and the call worthless. Therefore, any in-the ...

Chapter 22 Real Options 579 bre44380_ch22_573-596.indd 579 09/30/15 12:08 PM Expected = probability of × 37. 5+1 − probability o ...

580 Part Six Options bre44380_ch22_573-596.indd 580 09/30/15 12:08 PM cash flows above the minimum level of 240, and also suffic ...

Chapter 22 Real Options 581 bre44380_ch22_573-596.indd 581 09/30/15 12:08 PM abandonment later? In this case you have an abandon ...

582 Part Six Options bre44380_ch22_573-596.indd 582 09/30/15 12:08 PM at whatever short-term charter rates prevail at the start ...

Chapter 22 Real Options 583 bre44380_ch22_573-596.indd 583 09/30/15 12:08 PM Flexible production means the ability to vary produ ...

584 Part Six Options bre44380_ch22_573-596.indd 584 09/30/15 12:08 PM ◗ FIGURE 22.5 In the U.K. electricity prices are set every ...

Chapter 22 Real Options 585 bre44380_ch22_573-596.indd 585 09/30/15 12:08 PM customize them once it had firm orders. The change ...

586 Part Six Options bre44380_ch22_573-596.indd 586 09/30/15 12:08 PM The payoffs from “wait and decide later” can never be bett ...

Chapter 22 Real Options 587 bre44380_ch22_573-596.indd 587 09/30/15 12:08 PM 22-5 Investment in Pharmaceutical R&D An invest ...

588 Part Six Options bre44380_ch22_573-596.indd 588 09/30/15 12:08 PM To value the real option, we need a risk-free rate (assume ...

Chapter 22 Real Options 589 bre44380_ch22_573-596.indd 589 09/30/15 12:08 PM In this chapter we have presented several examples ...

590 Part Six Options bre44380_ch22_573-596.indd 590 09/30/15 12:08 PM Recall that the value of a real call option can be express ...

Chapter 22 Real Options 591 bre44380_ch22_573-596.indd 591 09/30/15 12:08 PM Given these hurdles, you can understand why systema ...