Zoho Sheet

VALUING AN OPTION TO DELAY A PROJECT

This program calculates the value of the option to delay making an investment.

Inputs relating the underlying asset

Enter the present value of cash flows from investing in project now =

$350.00

(in currency)

Entet the annualized standard deviation in ln(present value of CF)

22.36%

(in %)

Enter the initial investment needed to take project (in PV $) =

$500.00

(in currency)

Enter the number of years you have rights to project

(in years)

General Inputs

Enter the riskless rate that corresponds to the option lifetime =

7.00%

(in %)

Output

Stock Price=

$350.00

T.Bond rate=

7.00%

Strike Price=

$500.00

Variance=

0.05

Expiration (in years) =

Annualized dividend yield=

5.00%

d1 =

0.54

N(d1) =

#NAME?

d2 =

-0.46

N(d2) =

#NAME?

Value of Option to Delay =

#NAME?

delay_xls