Real Option Memo To: Dave Jacobs From: James Jones Date: November 26‚ 2012 Re: College Education Intro and type of flexibility with this option The option I’m going to discuss in this memo is whether I should continue on with my college career year after year‚ or just to abandon receiving a higher education and make my part time job a full time job. From the 7S framework‚ my real option would be the Disinvest/Shrink then the scope down option (abandon). Sources of uncertainty There
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Practice Questions-“Real Options” Some questions may require you to use financial calculator or Excel. (In the final exam‚ for students without financial calculator‚ writing down the formula will be enough. However‚ those formulas must be correct to get full credit. Therefore‚ it is a good practice to check whether you are correct by using Excel for these practice questions) 1. How are real options different from financial options? 2. Consider the following project data: (1) A
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REAL OPTIONS: STATE OF THE PRACTICE by Alex Triantis‚ University of Maryland‚ and Adam Borison‚ Applied Decision Analysis/ PricewaterhouseCoopers1 n an economic environment characterized by rapid change‚ great uncertainty‚ and the need for flexibility‚ it has become increasingly important for corporate managers to use investment evaluation tools and processes that properly account for both uncertainty and the company’s ability to react to new information. Real options has emerged as an approach
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Introduction: Real option analysis (ROA) is a decision-making structure that basically calculates the value of a future business decision. ROA borrows from financial options theory. A financial option gives the buyer of a financial asset the right‚ but not the obligation‚ to buy a stock or bond‚ for example‚ at a predetermined price at a future date. By analogy‚ a real option is a managerial decision-making tool that calculates the value of a business decision that a manager has an option‚ or right‚
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REAL ESTATE EVALUATION Concepts and definitions 1.Real estate market Real estate market plays a determinative role in every country’s economy since it is the most important asset in every citizen’s portfolio. Although real estate represents only a small percentage of G.D.P.‚ it supports the economy and significantly affects macroeconomic indexes such us consumption and investment. 1.1Characteristics of the real estate market Real estate is considered to be a very heterogeneous product with
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St. Petersburg University Graduate School of Management SAMSUNG GALAXY INVESTMENT PROJECT VALUATION USING REAL OPTIONS APPROACH Project by the 1nd year students: Dudnik Maxim Fomin Maxim Fakhritdinova Dilyara Sinyakin Anton Tkachenko Nikolay St. Petersburg 2013 Content Galaxy Investment Project Valuation Company Description Samsung Group is a South Korea is an international conglomerate company. It was founded by Lee Byung-chul in 1938 and
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Assignment: Arundel Partners You should prepare the Arundel Partners case for class discussion. I will ask several members of the class to present their analyses of the case issues‚ and we will discuss the pros and cons of each approach. In particular‚ one might think of analyzing this case using the real options perspective‚ and/or one might think of analyzing this case using the traditional analysis perspective (DPL‚ @Risk‚ etc.). Choose one or both of these ways of thinking about the problem
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Executive Summary Arundel Partners: The Sequel Project They would be interested in purchasing the sequel rights for one or more studiosˇ entire production over an extended period of not less than a year. If a particular film was a hit‚ and Arundel thought a sequel would be profitable‚ it would exercise its rights by producing the sequel. Alternatively‚ they can sell the rights to the highest bidder. Inevitably‚ the performance of the original films would not justify sequels‚ and for them the sequel
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Laura Martin: Real Options Valuation in the Cable Industry Case Questions 1. What is the nature of Laura Martin’s job? Define the specific problem that she is addressing. A. Laura Martin is an equity research analyst. This was a unique opportunity to demonstrate her knowledge of the drivers of value in the cable industry. She was going to reveal the value of stocks of cable industry using real options‚ which is a more realistic way of evaluating the value of a project than EBITDA multiples
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Arundel Partners Case Study Arundel Partners 10201 W Pico Boulevard Los Angeles‚ CA 90064 Arundel Senior Management: After a thorough investigation into the venture you are considering‚ we have the following data and analysis for your review. In order for you to make a more informed decision‚ we have also provided recommendations for this endeavor based off our findings. Throughout the entirety of
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