$1.$ Define in detail the Black Scholes and Binomial approaches to valuing options.

Describe the component factors and how they are derived. Discuss the Pros and

Cons of each approach as it relates to valuing nonfinancial real options.

$2.$ In the article $$Opportunities as Real Options: Getting Started with the Numbers$$

by Timothy Luehrman, the author develops an approach to real option calculation

that is a modified $($and simplified$)$ approach to traditional option value

methodology. Explain in detail the Luehrman approach and how it simplifies

standard Black Scholes.

$3.$ In the class we covered the cases MW Petroleum, Zorbas Bakeries and Arrundel

Partners. Briefly explain the main themes of each case and explain how options

analysis was used to determine how some projects have more value than simply a

NPV analysis would suggest.