Valuation: The Art and Science of Corporate Investment Decisions is the first textbook to offer an integrated approach to both project and enterprise valuation. The text goes beyond standard DCF analysis by including additional valuation methods commonly used in practice, such as comparables, simulations (including Crystal Ball®), and real options. In addition, discussions are considered against the backdrop of other quantitative and qualitative corporate issues that affect valuation, including:
Organizational structure and incentives: The text examines how the corporate decision-making process as well as the incentive system can positively or negatively affect valuation.
Strategic analysis and real options: Real options are presented as a tool to complement executive intuition and provide a more disciplined evaluation process that focuses on creating value.
Risk management and hedging: Risks associated with interest rate fluctuations, variable foreign exchange rates, and fluctuating commodity prices can create hedging and risk management opportunities that affect value.
Financing: The ability to secure attractive financing terms is an important source of value, and readers should understand how financing opportunities influence the value of an investment opportunity.
Irrational behavior: The text examines how limitations in cognitive abilities and biases in assessing abilities of key players can affect valuation.
Organizational structure and incentives: The text examines how the corporate decision-making process as well as the incentive system can positively or negatively affect valuation.
Strategic analysis and real options: Real options are presented as a tool to complement executive intuition and provide a more disciplined evaluation process that focuses on creating value.
Risk management and hedging: Risks associated with interest rate fluctuations, variable foreign exchange rates, and fluctuating commodity prices can create hedging and risk management opportunities that affect value.
Financing: The ability to secure attractive financing terms is an important source of value, and readers should understand how financing opportunities influence the value of an investment opportunity.
Irrational behavior: The text examines how limitations in cognitive abilities and biases in assessing abilities of key players can affect valuation.