# flexval - Year 1 2 3 4 5 6 7 8 9 10 Reinvestment Needs irm...

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Year einvestment Nee Firm Value nvestment Needs as percent of Firm V n(Reinvestment Needs) 1 \$71.00 \$1,000.00 7.10% -2.6450754019 2 \$33.00 \$1,071.00 3.08% -3.479840509 3 \$181.00 \$1,156.00 15.66% -1.854224018 4 \$55.00 \$1,211.00 4.54% -3.0918685583 5 \$83.00 \$1,413.00 5.87% -2.8346297749 6 \$233.00 \$1,666.00 13.99% -1.9671423692 7 \$90.00 \$1,870.00 4.81% -3.0338840395 8 \$211.00 \$2,001.00 10.54% -2.2495442011 9 \$122.00 \$2,133.00 5.72% -2.8612636737 10 \$445.00 \$2,225.00 20.00% -1.6094379124 Average Reinvestment Need as % of Valu 9.13% Standard Deviation in reinvestment needs = 61.25%

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OPTION WORKSHEET: LONG TERM OPTIONS VALUING FINANCIAL FLEXIBILITY This program calculates the value of financial flexibility on an annualized basis. It can be used to determine if firms should maintain excess debt capacity. Assumptions 1. All the assumptions underlying the Black-Scholes model apply 2. The dividend yield over the lifetime of the option is known and a constant. The user has to input the following variables
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## This note was uploaded on 01/29/2012 for the course FIN 6000 taught by Professor Banko during the Fall '11 term at University of Florida.

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flexval - Year 1 2 3 4 5 6 7 8 9 10 Reinvestment Needs irm...

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