Option to Abandon: a Put with a Salvage Value
This lesson is part of the course
In this lesson
You value Tarrow's right to close Glenmora and sell the equipment, and decide whether the mine is worth its asking price.
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Lessons in this course
- Static NPV vs Flexibility: Why NPV Undervalues Projects Locked
- Binomial Tree Parameters: u, d and the Risk-Neutral p Locked
- Building the Underlying Value Tree Locked
- Option to Delay: an American Call on the Project Locked
- Option to Expand: Paying to Scale Up Locked
- Option to Abandon: a Put with a Salvage Value Locked
- Staged Investment: a Compound Option in Two Phases Locked
- Sensitivity to Volatility & a Summary Chart Locked