個案總覽

Each corporate growth project is an option in the sense that managers face choices--push ahead or pull back--along the way. Yet, many companies hesitate to apply options theory to initiatives such as R&D and geographic expansion, partly because these "real" options are highly complex. In this article, the authors make the case that the complexity of real options can be eased through the use of a binomial valuation model. Many of the problems with real-options analysis stem from the use of the Black-Scholes-Merton model, which isn't suited to real options. Binomial models, by contrast, are simpler mathematically, and you can tinker with a binomial model until it closely reflects the project you wish to value. Suppose your company is considering investing in a new plant. To use the binomial model, you must create an "event tree" to figure out the full range of possible values for the plant during the project's lifetime. Then you work backward from the value at completion, factoring in the various investments, to determine the value of the project today. These calculations provide you with numbers for all possible future values of the option at the various points where a decision needs to be made on whether to continue with the project. The authors also address another criticism of real options: that gaps often arise between theoretical and realized values of options of all types. Such gaps may be largely the result of managers exercising options at the wrong time. Looking for trigger points that correspond to the nodes on a binomial decision tree should not only tell managers when they need to decide on exercise, but also specify rules governing the exercise decisions.

It's been only four years since First Rangeway Consulting went public, but to CEO Kenneth Charles, it seems like a lifetime. In the grand old days of its IPO, the company couldn't grow fast enough to meet customer demand; top talent answered the siren call of its options; and the owners gleefully watched their wealth escalate along with the stock. Post-bubble, First Rangeway's stock is down 80% from its peak value, potential hires are wary, and the company feels beleaguered by Sarbanes-Oxley and SEC requirements. First Rangeway's stock price is on the mend, and there are some extremely tempting opportunities on the horizon that will require a heap of capital. Rangeway's CFO speculates that these opportunities could mean as much as 30% growth over the next several years. Should First Rangeway remain public or go private? In R0402B and R0402Z, four experts weigh in on this fictional case study: Tom Copeland, the former chair of UCLA's finance department and managing director of corporate finance at Monitor Group; Chan Suh, the cofounder, CEO, and chairman of Agency.com; Ed Nusbaum, the CEO of Grant Thornton; and John J. Mulherin, the president and CEO of the Ziegler Companies.

It's been only four years since First Rangeway Consulting went public, but to CEO Kenneth Charles, it seems like a lifetime. In the grand old days of its IPO, the company couldn't grow fast enough to meet customer demand; top talent answered the siren call of its options; and the owners gleefully watched their wealth escalate along with the stock. Post-bubble, First Rangeway's stock is down 80% from its peak value, potential hires are wary, and the company feels beleaguered by Sarbanes-Oxley and SEC requirements. First Rangeway's stock price is on the mend, and there are some extremely tempting opportunities on the horizon that will require a heap of capital. Rangeway's CFO speculates that these opportunities could mean as much as 30% growth over the next several years. Should First Rangeway remain public or go private? In R0402B and R0402Z, four experts weigh in on this fictional case study: Tom Copeland, the former chair of UCLA's finance department and managing director of corporate finance at Monitor Group; Chan Suh, the cofounder, CEO, and chairman of Agency.com; Ed Nusbaum, the CEO of Grant Thornton; and John J. Mulherin, the president and CEO of the Ziegler Companies.