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Notes
- 1.
This chapter assumes elementary understanding of option pricing theory. Readers unfamiliar with option pricing may first read Chap. 14 (Pricing Equity Options) before reading this chapter. We have included real options under valuation models for the sake of preservation of continuity and coherence.
- 2.
Range of growth option values are estimated by subtracting the high and low value of capitalized earnings (at discount rates ranging from 15% to 25%) from the market value of equity.
- 3.
This example is based on a presentation by Real options group.
- 4.
Most standard corporate finance texts like Principles of Corporate Finance by Brealy and Myers provide option pricing tables like the time value tables.
- 5.
Crystal Ball is a product of Decisioneering. See www.decisioneering.com.
- 6.
- 7.
This ignores the interaction between the options.
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Vishwanath, S. (2009). Real Options Perspective of Security Analysis. In: Krishnamurti, C., Vishwanath, R. (eds) Investment Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-88802-4_12
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