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Thank you very much for a brilliant lecture.
I have a question. In share option lecture you expressed that the value of the option is what we pay for the option now. Is it same for the real option? Does it mean, as in example 1, we pay now $3.90m to buy option to delay – call option?
Can you please also clarify what is behind of the full value of project of $5.9m
Sir, just some clarification please. In June 2012 exam Q1 (iii) which dealt with delaying the project I noticed they used a different method to calculate N(d1) & N(d2), does that mean I can use EITHER method in the exam? Which is the preferred option?
Thank you -
The examiner has not used a different method. It is simply that the tables only have 2 decimal places for d and so he has made it slightly more accurate by approximating to a third decimal place.
Although it does make it a little more accurate, you do not really need to do this in the exam – just take d to the nearest 2 decimal places.
It is certain that i will pass P4 now, brilliant lecture. Please can we have videos for the other options as well? and for (The valuation of acquisitions and mergers)?. This will be helpful a lot.
Thanks alot for the great lecture! May I ask where I could find the lecture for chapter 16(The valuation of acquisitions and mergers)? Are there any vedios are for example 1 (calculate the economic value added)?
Sir..kindly late me know, in making decision of delay or proceed..i am going to compare present npv with value of call option???? that is $2m with $3.92
@syedwaqar, You don’t compare them. The option makes the project worth more than if the option did not exist.
Thank you for the lecture.it was easy and straight forward but please could you tell me what the full value of the project will be compared to,as the video cut the decision aspect out.
Can you please explain me that how cash flows have been arrived in the given answer of Example 02 in Chapter 16…???
@achalaand, sorry – there is a mistake (the synergistic benefit is 7 p.a. after tax, but the answer has it as 5 p.a.). The updated course notes have corrected this mistake.
This lecture was awesomeeee!!!…..However, can you please upload a video on option to abandon/redeploy please?:)
thank you so much for the lecture, but i want to find out if all real options will always be a call option?
Delay and Expand are Call Options
Redeploy and Abandon are Put Options
Sir, pls was the conclusion/decision to delay the project based on the fact that it has a positive value. Thnx
thank you very much:)
this was very helpful
I could watch only part of the video:( There was some problem in the middle
thank you, this was brief but clear
N(d2) rounding off error? answers in the back of course notes has the right answer.
hi is there suppose to be a part 2 for this video? thanks
there is not part 2, if it was mentioned in the lecture, it was a mistake
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