Managerial Finance Assignment -

Consider the following valuation model:

Part A. In complete sentences:

1. Explain the model variables

2. Define risk and how risk is related to the model (ie affects firm value)

3. Discuss how corporate governance is related to firm value.

4. Explain how agency costs can reduce firm value?

5. Discuss the operational drivers of value.

6. Discuss the relationship between capital budgeting and firm value.

7. Discuss the relationship between capital structure and firm value.

Part B. Market efficiency is still an open issue in finance. Define market efficiency and make the case for and against market efficiency. Earlier in the course you were asked whether markets are efficient. Support your answer here.

Part C. Chapter 14 of our text discusses real options.  Steve Ross's paper "The Net Present Value Rule: Uses and Abuses, The Good, The Bad and The Ugly was one of the first papers published that examined the option properties of capital projects. Spreadsheet Problem 14-9 on page 567 of the text sets out a scenario for a project Bradford Services Inc is considering that has embedded options. Use these three sources to explain and demonstrate the concept and use of real options in evaluating capital projects. The spreadsheet and the Ross paper are included in this file.

Attachment:- Assignment.rar