LECTURE 4 Investment under uncertainty, real options Derivatives valuation approach. Example: Copper mine Strategic options. Examples: Copper mine with shutdown option Valuing Vacant Land Valuation of an option to delay Ratio comparison approach Additional Definitions ECOM051 Business Finance, Lecture 4 (Dr Giles Spungin, G.Spungin@qmul.ac.uk, www.excalibur24.com, QMUL©2010-11) 1 Discounted cash flow methods ignore opportunities (strategic options, indirect cash flows) created by investment project. Strategic options exist whenever management has any flexibility regarding the implementation of a project. Options to change the scale of a project (downsize, expand), abandon it, or …show more content…
Forward to buy 25k £0 Cashflow at Y1 Cashflow at Y2 25k p1 £0.10 50k p2 £0.10 25k p1 £0.65 £0 £0 50k p2 £0.60 £25k 0.65-0.10 £0 £0 £50k 0.60-0.10 25k p1 £0.10 50k p2 £0.10 copper in Year 1 Forward to buy 50k £0 copper in Year 2 with £25k 0.65-0.10 1+0.05 maturity in Year 1 Buy ZCB with face value £25k(0.65-0.10) with £50k 0.60-0.10 1+0.062 maturity in Year 2 Buy ZCB with face value £50k(0.60-0.10) TOTAL £35,345 ECOM051 Business Finance, Lecture 4 (Dr Giles Spungin, G.Spungin@qmul.ac.uk, www.excalibur24.com, QMUL©2010-11) 7 Strategic options DEFINITION: strategic options are opportunities that arise from undertaking a project. These opportunities are usually missed in the direct cash flow forecasts, as they are not easily identifiable. An option to delay the start of a project, or a mine with shutdown option is examples of such strategic options. In case of the latter, we employ a binomial tree approach. Copper mine with shutdown option The mine will be closed down if the cost of extraction is greater than copper price. EXAMPLE: Suppose that a copper mine will produce 75mln pounds of copper one year from now if economic conditions ECOM051 Business Finance, Lecture 4 (Dr Giles Spungin, G.Spungin@qmul.ac.uk, www.excalibur24.com,
For example, a repair project that would better the environment could not occur for an extended period due to a delay.
Which of the following Windows commands will shutdown and power down the computer FileServer in 2 minutes?
The qualities of the monster often reflect the views of the time period the novel was written in.
Any path that if delayed will delay the completion of the entire project is known as a:
a. What makes Arundel think it can make money by buying a package of sequel rights? Is the profit opportunity, if it exists, likely to be sustainable?
c. Internal matters (work stoppages or other labor difficulties, substantial dependence on the success of a particular project, uneconomic long-term commitments, or the need to significantly revise operations).
Disbelief fell upon the dark and dreary hospital room, silence fell upon the dreary hospital room, she doesn't believe what just happened. Luz’s world is falling apart. It’s as if the world was falling on top of her. She's been with him for several years, and now those years have come to an end.
In 1986, the film “The Mission” was released. “The Mission” focuses on the journey of Jesuit Priest, Father Gabriel, as he enters South America. Father Gabriel traveled to the Guarani lands to convert the natives to Christianity. The title of the movie comes into play with the Priest joining Rodrigo Mendoza, who was a reformed slave trader, on a mission in South America. A treaty is formed between the Spanish and Portuguese that gave the Spanish territory to be ruled under Portuguese jurisdiction.
This occurs when workers and other resources are reassigned; the project is evaluated and administratively closed (Kloppenborg 2003, p. 14). Thomas hated this stage the most. He did not want to face Scott with the figures of this project because he knew he was over budget. Thomas even had a final meeting with his staff to see if there was any way to cut corners before presenting the last financial document to Scott.
Paradis Adventure Snorkel and Dive Shop was founded in February 2009 and is a partnership which comprises of two (2) shareholders – Mr. Antony Howard and Mr. Frank Lewis. Paradis Adventure is located at the end of the Tucker Valley Road, Chaguaramas where Macqueripe bay is located. Macqueripe Bay is a small pocket beach just 117 metres long and 16 metres wide tucked neatly in a bay which makes for great bathing, snorkeling and scuba
The third stop in my journey is Bujumbura. When i first arrived i could easily tell that the people were not happy. What most people are not happy with is the mass starvation. Many people in the country are starving and with the country having one of the highest fertility rates and being overpopulated it doesn’t seem like this will be an easy fix. Due to having so many people, others are not able to access their land so that they can provide food for their family. This landlocked country is due to many wars, very little education, and inefficient economic growth. Also with the mass influx of people returning after being displaced due to the genocides there is no where left for the people to be put. As well as it has an abundance of resources
Stutdown-shartup activity planner’s main goal is to complete project with minimal time as well as minimal cost. Time, being one of most vital factors during shutdown-startup of any industry, can be traded between various divisions like production and technical, mechanical, electrical or human resource within the industry in sequential projects. Much effort (e.g. resources which demand cost) is required to complete the activities in shorter time. There is a trade-off relationship between activity time duration and its resources. In optimal case for trading time, various divisions have reasonable incentive to cooperate. In this paper, we worked for the problem in field of industry cooperating and then we propose a model to solve it based on games
Through the journey, a person can experience exciting, dangerous and challenging situations which creates opportunities for understand themselves as well as their surroundings. However all types of journeys should have an obstacle which must be overcome, and in doing so propels the person to complete the journey. These concepts are explored in Sally Morgan’s novel “My Places” where journey is depicted as a spiritual journey of self-discovery and Curt Hanson’s film “8 Mile” which delves into a white man’s struggles in a musical genre that is dominated by African Americans.
| Since break-downs occur at the initial step, the rest of the process gets delayed causing longer customer lead time and extra shifts are required which increases labour expense.
Having 3 days of delay in electrical can affect the whole project. Therefore, the negotiation of 15 working days would exceed up to 18 days, which could cause the penalty of $300 ($100 per extra day). In order to minimise a project’s critical path, sequencing of tasks should be changed. On the off chance that one can do a project’s tasks in alternate grouping to that initially proposed, one might have the capacity to shorten the critical path. A level of intricacy by striving for shortening the critical path, which is primarily hazardous, is unavoidably acquainted with the task. (Aydar, 2014) With a specific end goal to convey this shorter timescale, the critical path should be controlled