FIN532:

Harvard Business Review Readings

• Bruns, W. J., Jr. (1997). Basic capital investment analysis.
• Jeffery, M., & Rzymski, C. (2011). How to perform sensitivity analysis with a data table. Kellogg School of Management via Harvard Business Review.
• Mullins, D. W., Jr. (1993). Diversification, the capital asset pricing model, and the cost of equity capital.

View Lesson 1 instructional videos (total video time for this lesson is 32:84).

Homework 1, Exercises 2 and 4 (I, G)

Note: Only Exercises 2 and 4 will be graded for the Homework 1 grade. The other exercises are for you to use to practice the skills you have learned.

1. Exercise 1: The Net Present Value Approach (I, U)
2. Exercise 2: Measurement of Incremental Cash Flows (I, G)
3. Exercise 3: Estimation of Discount Rate (I, U)
4. Exercise 4: Sensitivity Analysis (I, G)
5. Exercise 5: Monte Carlo Simulation Using @RISK Software (I, U)

You will complete all of these exercises by using the Lesson 1 Exercises Excel template, and will then need to submit the exercises as a completed workbook to the Lesson 1 Drop Box.

For more information related to the Homework 1 Assignment, refer to the Homework Assignments section in the Course Syllabus.

Discussion Forum Participation Activity

1. Participation Activity: Measurement of Incremental Cash Flows Discussion Forum (I, G)

Final Case Analysis

1. Reminder: Please select your team members and e-mail your team membership to the instructor by the end of Week 1.

All assignments are due by 3:00 a.m. eastern time (ET) on Monday unless noted otherwise.

Harvard Business Review Reading

• Greenwood, R. & White, L. (2006). Decision trees.

Note: Refer to the Harvard Business Review (HBR) Articles section in the Course Syllabus for instructions on how to access and purchase HBR articles.

Library Reserve Reading

• Copeland, T. E. & Keenan, P. T. (1998). How much is flexibility worth? McKinsey Quarterly 2, 38–49.

Note: This article can be accessed through the library's electronic reserves system.

There are no instructional videos for this lesson.

Homework Assignment (optional) (I, U)

Note: These exercises are optional and are for you to use to practice the skills you have learned.

1. Exercise 1: The Net Present Value Approach (I, U)
2. Exercise 2: Decision Tree Analysis (I, U)
3. Exercise 3: Using Decision Tree Analysis for Real Options (I, U)

Once you have completed all of the exercises above by using the Lesson 2 Exercises Excel template, you can then submit the exercises as a completed workbook to the Lesson 2 Drop Box. Submission of this assignment is not required.

For more information related to the optional Homework Assignment, refer to the Homework Assignments section in the Course Syllabus.

Discussion Forum Participation Activity

1. Participation Activity: Real Options Classification Discussion Forum (I, G)

All assignments are due by 3:00 a.m. ET on Monday unless noted otherwise.

Harvard Business Review Readings

• Edleson, M. E. (1999). Real options: Valuing managerial flexibility.
• Harris, R. S., & Conroy, R. M. (2007). The Black-Scholes option pricing model.
• Harris, R. S., & Conroy, R. M. (2007). Option contracts and their valuation.
• Harris, R. S., & Conroy, R. M. (2007). Option valuation and dividend payments.
• Luehrman, T. A. (1995). Capital projects as real options.
• Luehrman, T. A. (1998). Strategy as a portfolio of real options.

Note: Refer to the Harvard Business Review (HBR) Articles section in the Course Syllabus for instructions on how to access and purchase HBR articles.

There are no instructional videos for this lesson.

Homework 2, Exercises 1 and 2 (I, G)

Note: Exercises 1 and 2 will be graded for the Homework 2 grade.

1. Exercise 1: The Black-Scholes-Merton Option Pricing Model (I, G)
2. Exercise 2: More Real Options Examples Using the Black-Scholes-Merton Model (I, G)

You will complete all of these exercises by using the Lesson 3 Exercises Excel template and will then need to submit the exercises as a completed workbook to the Lesson 3 Drop Box.

For more information related to the Homework 2 Assignment, refer to the Homework Assignments section in the Course Syllabus.

Discussion Forum Participation Activity

1. Participation Activity: Real Options Analysis Discussion Forum (I, G)

All assignments are due by 3:00 a.m. ET on Monday unless noted otherwise.

Harvard Business Review Readings

• Conroy, R. M. (2002). Binomial option pricing. Darden Business Publishing via Harvard Business Review.
• Copeland, T., & Tufano, P. (2004). A real-world way to manage real options.

Note: Refer back to the Harvard Business Review (HBR) Articles section in the Course Syllabus for instructions on how to access and purchase HBR articles.

There are no instructional videos for this lesson.

Homework Assignment (optional) (I, U)

Note: These exercises are optional and are for you to use to practice the skills you have learned.

1. Exercise 1: Binomial Option Pricing Model to Value a Financial Option (I, U)
2. Exercise 2: Binomial Option Pricing Model to Value Real Option Opportunities (I, U)

Once you have completed all of the exercises above by using the Lesson 4 Exercises Excel template, you can then submit the exercises as a completed workbook to the Lesson 4 Drop Box. Submission of this assignment is not required.

For more information related to the optional Homework Assignment, refer to the Homework Assignments section in the Course Syllabus.

Discussion Forum Participation Activity

1. Participation Activity: Binomial Option Pricing Model Discussion Forum (I, G)

Midterm Exam (I, G)

1. The Midterm Exam will be available for you to take for one week, beginning Monday at 8 a.m. until the folloiwng Monday at 3 a.m. ET.

Mid-Course Survey (I, U)

1. The Mid-Course Survey is an anonymous ungraded activity. (I, U)

All assignments are due by 3:00 a.m. ET on Monday unless noted otherwise.

Library Reserve Reading

• Arnold, T., & Shockley, R. L. (2001). Value creation at Anheuser-Busch: A real options example. Journal of Applied Corporate Finance, 14 (2), 52–61.

Note: This article can be accessed through the library's electronic reserves system.

View Lesson 5 instructional videos (total video time for this lesson is 4:18).

Homework 3, Exercises 1 and 2 (I, G)

Note: Exercises 1 and 2 will be graded for the Homework 3 grade.

1. Exercise 1: Estimating the Value of the Underlying Asset (I, G)
2. Exercise 2: Estimating the Volatility of the Underlying Operating Asset Value (Parts 1 and 2) (I, G)

You will complete all of these exercises by using the Lesson 5 Exercises Excel template, and will then need to submit the exercises as a completed workbook to the Lesson 5 Drop Box.

For more information related to the Homework 3 Assignment, refer to the Homework Assignments section in the Course Syllabus.

Discussion Forum Participation Activity

1. Participation Activity: Probability Distribution Discussion Forum (I, G)

All assignments are due by 3:00 a.m. ET on Monday unless noted otherwise.

Library Reserve Reading

• Shockley, R. L., Curtis, S., Jafari, J., & Tibbs, K. (2002). The option value of an early-stage biotechnology investment Journal of Applied Corporate Finance, 15 (2), 44–55.

Note: This article can be accessed through the library's electronic reserves system.

There are no instructional videos for this lesson.

Homework Assignment (optional) (I, U)

Note: This exercise is optional and is for you to use to practice the skills you have learned.

1. Exercise 1: The Option Value of an Early-Stage Biotechnology Investment (I, U)

Once you have completed all of the exercises above by using the Lesson 6 Exercises Excel template, you can then submit the exercises as a completed workbook to the Lesson 6 Drop Box. Submission of this assignment is not required.

For more information related to the optional Homework Assignment, refer to the Homework Assignments section in the Course Syllabus.

Discussion Forum Participation Activity

1. Participation Activity: Simultaneous Compound Options Discussion Forum (I, G)

All assignments are due by 3:00 a.m. ET on Monday unless noted otherwise.

Harvard Business Review Readings

• Copeland, T., & Tufano, P. (2004). A real-world way to manage real options.
• Gompers, P. A. (2001). Penelope’s personal pocket phones.
• Royer, I. (2003). Why bad projects are so hard to kill.

Note: Refer to the Harvard Business Review (HBR) Articles section in the Course Syllabus for instructions on how to access and purchase HBR articles.

Library Reserve Readings

• Copeland, T. E. (2010). From expected cash flows to real options. Multinational Finance Journal, 14 (1/2), 1–27.
• Coy, P. (1999). Exploiting uncertainty. Business Week.
• Eapen, G. (2002). The accidental real options practitioner Journal of Applied Corporate Finance, 15 (2), 102–107.
• Johnston, D. C. (1998). The next wave in flying: 650 seats (maybe). New York Times.
• Mauboussin, M. J. (1999). Get real: Using real options in security analysis. Credit Suisse First Boston Equity Research Paper.
• Rothman, A. Yang, J. D., Levine, J. B., & Templemann, J. (1993). Boeing launches a stealth attack on airbus. Business Week.
• Teach, E. (2003). Will real options take root? CFO Magazine.
• Triantis, A., & Borison, A. (2001). Real options: State of the practice by Triantis and Borison. Journal of Applied Corporate Finance,14, (2), 8–24.
• University of Maryland. (2003). University of Maryland Roundtable on Real Options and Corporate Finance. Journal of Applied Corporate Finance, 15 (2), 8–23.

Note: These articles can be accessed through the library's electronic reserves system.

There are no instructional videos for this lesson.

Homework Assignment

There are no exercises for you to practice for this lesson.

Final Case Analysis (T, G)

Complete and submit the Final Case Analysis. (T, G)

Discussion Forum Participation Activity

1. Participation Activity: Real Options Discussion Forum (I, G)

All assignments are due by 3:00 a.m. ET on Monday unless noted otherwise.