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

(Hop HipldF0AV) #1

SubstitutingtheBlack-Scholesequationforthevalueofan
equivalent call into this equation, we get:


Thus,thereplicatingportfolioforaputiscreatedbyselling
short 1 −N(d 1 )] sharesofstock and investingKe−rt[1 −
N(d 2 )] in the riskless asset.


1 L.Nakamura,“Intangibles:WhatPuttheNewin theNew
Economy?,”FederalReserveBankofPhiladelphiaBusiness
Review(July/August 1999): 3–16.


2 B. Lev, “Remarks on the Measurement, Valuation and
Reporting ofIntangible Assets,”FRBNY EconomicPolicy
Review(September 2003).


3 B. Lev, and P. Zarowin, “The Boundaries of Financial
ReportingandHowtoExtendThem,”JournalofAccounting
Research(Autumn 1999): 353–385.


4 Iamintentionallymakingtheseassumptionsasoptimistic
asIcan.Ihopeyou,asthereader,canmaketheactualcash
flows resemble my estimates.


5 When we use inflation-adjusted values, the value of the
brand name increases from $26.15 billion to almost $40
billion.

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