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Real Options

Former userFormer user5y ago

[Content removed at user request]

John MoffatJohn MoffatTutor5y ago#1
In 1, it is not that we compare anything. The result of the BS formula is the NPV including the value of the option. Therefore the value of the option is the NPV including the value less the NPV without the option. For 2, 3, and 4, the result of the BS formula is the value of the option. So the NPV with the option is the NPV without the option plus the value of the option.
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