CFS Working Papers Series
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The Center published working papers on current issues in finance from 2003-2009.
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Browsing CFS Working Papers Series by Author "Lander, Diane M."
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Item Introducing students to the real option approach to capital budgeting(Southern New Hampshire University, 2003) Lander, Diane M.; Pettengill, Glenn N.The real option approach to capital budgeting has gained acceptance in the business community and is now addressed in Financial Management textbooks and Corporate Finance courses. Real option valuation can be a challenge for both students and instructors. Using two real options examples, a Black-Scholes growth (call) option and a binomial abandonment (put) option, we discuss possible student questions and areas of confusion, potential teaching issues, and basic connections the instructor may need to help students make. We conclude by providing suggestions and a list of resources for facilitating student learning. A revised version of this paper has since been published in the Journal of the Academy of Business Education. Please use this version in your citations.Item Strategic implications of valuation methods(Southern New Hampshire University, 2003) Alessandri, Todd M.; Lander, Diane M.; Bettis, Richard A.Strategy is ultimately aimed at creating shareholder value, placing valuation in a central role linking finance and strategy. Focusing on growth options, this paper uses a unique "perfect information" model to examine, from a strategy point of view, the relationship between the market value of the firm and its intrinsic, or DCF, value. Although the research is at the level of the firm, the results have implications at the level of individual strategies and projects, since a firm can be conceptualized as a collection of projects. The findings highlight the relationship between the value of growth options and macroeconomic conditions, industry characteristics, and firm-specific factors. A revised version of this paper has since been published in the journal Advances in Strategic Management. Please use this version in your citations.