The real options approach to valuation - Haskayne School of Business
The real options approach to valuation - Haskayne School of Business
The real options approach to valuation - Haskayne School of Business
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Value <strong>of</strong> Project once Investment has been Completed: V(C,t) 1 22φ C2VCC+ α * CV + V − rV + CCt=0Subject <strong>to</strong> boundary condi*on at expira*on <strong>of</strong> the patent: V( C,T)=M• CHas solu*on: CV ( C,t)= [1 − exp( −(r −α*)(T − t))]+ MC exp( −(r − *)( T − t))r −α*α