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Real Options Valuation

Value of an Option - Decision tree analysis

Decision tree analysis shows a project to have several possible outcomes the best of which has an NPV of $10M calculated over a five year life. This best case path has an overall probability of occurring of 25%. A real option is available at an initial cost of $750,000 which will add a single $5M cash inflow to this best case pa

Special Issues in Valuation

Discuss some of the positive and negative evidence used to establish the need for a valuation allowance for a tax loss carryforward. Also, indicate the effect of the valuation allowance on the free cash flow forecast.

Stock Valuation

1. If you bought a share of common stock, you would probably expect to receive dividends plus an eventual capital gain. Would the distribution between the dividend yield and the capital gain yield be influenced by the firm's decision to pay more dividends rather than to retain and reinvest more of its earnings? Explain. 2. C

Stock options

Stock options exercisable at $50 per share to obtain 24,000 shares of common stock were outstanding dw period when the average market price of the common stock was $60 and the ending market price was $55. Required By how many shares will the assumed exercise of these options increase the weighted-a" number of shares out

Theory

Explain these financial theories. Liquidity risk and Option pricing theory.