17. Real option valuation (S23.6) Josh Kidding, who has only read part of Chapter 10, decides to...
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17. Real option valuation (S23.6) Josh Kidding, who has only read part of Chapter 10, decides to value a real option by (1) setting out a decision tree, with cash flows and probabilities forecasted for each future outcome; (2) deciding what to do at each decision point in the tree;
and (3) discounting the resulting expected cash flows at the company cost of capital. Will this procedure give the right answer? Why or why not?
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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