In this session, we began by finishing off our discussion of private company valuation by looking at ownership transitions (from founder to VC to public) and how they play out in valuation. We then started on real options, by arguing that the premium that they deliver comes from learning and adaptive behavior, and suggested three questions to keep real options from becoming just another buzz word. Finally, we looked at the option to delay and how that plays out in the value of a patent.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/tests/realoption1.pdf
Post Class Test: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22test.pdf
Post Class Test Solution: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22soln.pdf