Company valuation and M&A + Real option analysis

“There will be less discussion from me regarding Assignment 2 as its nature is quite specific (less flexibility around numbers and assumptions, unlike Assignment 1).

Clearly, Question 1 is on company valuation and M&A. Contents are pretty much from Module 3 weeks 1 and 2 lecture notes.

On Question 2, all (the materials) you need is from Real option analysis lecture note. When it comes to tackling this question, here are the general steps involved:

1. Decide first which type of real option (ONE out of the THREE: To expand, To abandon, or To delay) is applicable to the case.

2. Then, calculate the value of this real option accordingly. For this, you need to figure out at least five variables: P, EX, Rf, t, and SD. And if ‘rate of decay (y)’ is relevant, you need to consider that too. All these should be obtainable from the case.

3. Finally, in the second question, you will need to perhaps make use of ‘goal seek’ function again. You need to figure out the rest.

That is as much clue as I can give.”

so use/read all the lecture notes i’ll send as it’s important factor about the assesment

thank you

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