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Unformatted text preview: 30.00% Inputs relating to the option Enter the present value of the cost of developing product/project = $1,000,000 (in currency) Enter the life of the product patent / project rights = 10 (in years) As a default, we will assume that you if you do not invest in the project once it becomes viable, you will lose one year of protection and that your cash flows will decline proportionately (1/remaining life of the patent) Do you want to change this default? No If so, enter the expected annual cost of delaying investment (as % of value) General Inputs Enter the riskless rate that corresponds to the option lifetime = 8.00% VALUING A LONG TERM OPTION/WARRANT Stock Price= $800,000 T.Bond rate= 8.00% Strike Price= $1,000,000 Variance= 0.09 Expiration (in years) = 10 Annualized dividend yield= 10.00% d1 = 0.0283091826 N(d1) = 0.5112922215 d2 =-0.9203741155 N(d2) = 0.1786886452 Value of the product patent/project right = $70,185...
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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.
- Fall '11