**Unformatted text preview: **guess how long it would take for IBM to double, given current and projected markets and industry growth assumptions. For example, we could say IBM can hit 200 and the probability is 1 for 10 years, .8 for 8 years, .5 for 5 years, .2 for two years. Then, multiply the probability of the 1M at that time and sum it up. As a crude guess, I would offer 40-50% of the 1M, which takes into account time value of money (6-8% rate), how quickly I think IBM will double (about 10 years), and my level of risk aversion (would charge on the upper end of this spectrum)....

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- Fall '06
- STOIKOV
- flow/ npv approach, industry growth assumptions