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.