any point "failure‚" investment decision is to stop funding Assuming Standard deviation of 0.5 Using T= 7 years in Black-Scholes Valuation 2 Decision Tree See worksheet "Decision Tree" 3 Detailed description of Real Option Technique "First‚ using a decision tree‚ I came up with a simple expected value of $13‚980‚000 based on the costs to complete each phase‚ the probabilities of completing each phase‚ and the costs and probabilities associated with failure
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case 2 Issues Raised Drug development issues – selecting a portfolio of products In-house versus Licensing issues Types of risks – Target risk‚ Mechanism risk‚ Molecule risk‚ Market risk Real options analysis Team 2 - Vertex Pharmaceuticals case 3 Which of the 4 project portfolio options currently facing Vertex do you favor? VX-148: least scientific sizzle (IMPDH is a ‘validated target’; Vertex wants breakthroughs)‚ already similar drugs on market‚ 2.7 million people affected by
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Nucor Corporation is made up of 11‚500 teammates whose goal is to "Take Care of Our Customers." We are accomplishing this by being the safest‚ highest quality‚ lowest cost‚ most productive and most profitable steel and steel products company in the world. We are committed to doing this while being cultural and environmental stewards in our communities where we live and work. We are succeeding by working together. Nucor ’s History Nucor Corporation is the largest steel producer in the United
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Nucor Corporation – Case Study and Recommendations on Strategy Nucor Corporation – Case Study and Recommendations on Strategy Introduction Nucor Corporation: Competing against Low Cost Steel imports deals with leading steel manufacturer Nucor Corporation and trends in the steel industry affecting Nucor. Steel manufacturing is an old business‚ but is currently facing the fast changes associated with new technologies‚ the rise of globalization‚ and changes in cost and efficiency. To date‚ Nucor
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Nucor Corporation (A) We are a cyclical business... Basically when you are at the peak of the cycle—times are good‚ interest rates are low‚ people are building—our margins increase. When we go to the trough‚ of course‚ the margins are squeezed. But over the last 25 years Nucor has never had a losing quarter. Not only a losing quarter‚ we have never had a losing month or a losing 1 week. —John D. Correnti‚ President and CEO‚ Nucor In 1998‚ Nucor was a Fortune 500 company with 6‚900 employees
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Describe the importance of scenario planning how it works and limitations. From Schoemaker: Scenarios are stories about the way the world might turn out tomorrow‚ stories that can help us recognize and adapt to changing aspects of our present environment. Scenario planning is a disciplined method for imagining possible futures that companies have applied to a great range of issues. It goes further than other plans‚ such as contingency planning and sensitivity analysis. These plans always focus
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Professor: José Tudela Martins Students: João Pedro Jesus‚ Maria Kostyunina & Marta Gonçalves Agenda • • • • • • Problem Statement Antamina Project Overview Assumptions Prices Forecast DCF Valuation: 3 Scenarios Options Valuation Real Options Option to Abandon • Re‐valuation according to changes Expropriation Block Funds • Main Conclusions Location of Antamina Problem Statement How much is Antamina worth? Impact of a 5% per year risk of expropriation or a possibility of a two
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The most common definition of an option is an agreement between two parties‚ the option seller and the option buyer‚ whereby the option buyer is granted a right (but not an obligation)‚ secured by the option seller‚ to carry out some operation (or exercise the option) at some moment in the future. Options come in several varieties: A call option grants its holder the right to buy the underlying asset at a strike price at some moment in the future. A put option gives its holder the right to sell
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Nucor Case Analysis Position Statement: Nucor has developed a synergistic workforce that provides substantial productivity while maintaining a flat level of managerial hierarchy and responsible decentralized divisions. This has enabled them to keep the pace of technology and should continue to make investments including commercializing Compact Strip Production (CSP) technology. Major Issues: * The CSP technology requires continuous operation and a 96% reliability in order for it
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capital expenditures At any point "failure‚" investment decision is to stop funding Assuming Standard deviation of 0.5 Using T= 7 years in Black-Scholes Valuation 2 Decision Tree See worksheet "Decision Tree" 3 Detailed description of Real Option Technique "First‚ using a decision tree‚ I came up with a simple expected value of $13‚980‚000...... Merck & Company: Evaluating A Drug Licensing Opportunity Should Merck license the compound? Merck would be responsible for 1) the
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