This then lead to a discussion of how we might use a firms own
financial information to arrive at an estimate at its cost of capital.
Specifically its weighted average cost of capital.
And now we shift to real options analysis.
We'll begin the module by outlining the problems that we might
face while undertaking standard NPV analysis.
And then move on to the describing three of the main styles of real options.
The options to invest, expansion options, and the option to abandon operations.
We'll then work through a discounted cash flow approach to approximating the value
of real options, using decision trees,
and conclude with a review of some of the key empirical evidence in terms of
how widespread real options analysis is in practice.
We'll also look at the circumstances where we might wish to be particularly aware of
real options.
Now, as the final module in the final course of a four course specialization,
it's not surprising that we're going to build
upon some of the earlier work that we considered.