CNS is a small biotech company. The founder of the company is deciding if it's worth applying for phase I approval that will allow the company to continue its research. He must determine the value of the research. Using the traditional DCF valuation method, he is not sure if this captures all of the value of the research and must decide if either the Black-Scholes or binomial model would more accurately determine the value.
The assistant portfolio manager for an asset management firm is asked to review the attractiveness of a Japanese telecom sector. The performance of this particular sector has been declining. He must analyse one of the leading companies within the sector to determine its value and if further analysis of the entire sector should be done. Students are exposed to industry analysis and are shown how to incorporate conclusions from this analysis into the discounted cash flow model.