I need to know how to solve this I don’t just want the answer. Einstein Machine Intelligence (EMI), Inc.

I need to know how to solve this I don’t just want the answer.

Einstein Machine Intelligence (EMI), Inc. is considering a Scientific & Urban Studies Intelligent Educator (SUSIE) project whose primary objective is construction of an educational tutoring package called Behavioral enRichment And Intelligence System (BRAINS) for elementary schools. Concurrent with the development and release of BRAINS, licensing of the underlying technology to other firms is expected to generate additional cash flow. The total series of after-tax expected, end-of-year (EOY) cash flows expressed in millions beginning now at Time Zero and ending with terminal value at EOY 6 are as follows: (numbers within parentheses such as \$(###) indicate a negative cash flow).

SUSIE CF: Time Zero: \$(100); EOY 1: \$(8); EOY 2: \$12; EOY 3: \$(417); EOY 4: \$42; EOY 5: \$54; EOY 6: \$572

Unfortunately SUSIE has a negative NPV using traditional DCF at EMI Inc. WACC discount factor of 12%

However, a UCF IEMS MS graduate recognized that using the Luehrman technique, SUSIE could be broken into two phases: (1) an R&D Licensing phase and (2) an optional marketing of BRAINS phase. During assessment of the cash flows, he/she realized volatility in the cash flows of σ = 40% with EOY cash flows being:

R&D Licensing: Time Zero: \$(100); EOY 1: \$(8); EOY 2: \$12; EOY 3: \$8; EOY 4: \$12; EOY 5: \$11; EOY 6: \$165

BRAINS option: Time Zero: \$(0); EOY 1: \$(0); EOY 2: \$(0); EOY 3: \$(425); EOY 4: \$30; EOY 5: \$43; EOY 6: \$407

What is the eNPV of SUSIE considering the NPV of R&D Licensing plus the Black Scholes Call option value of BRAINS? Consider EOY 3 investment of BRAINS as the Exercise Price and the corresponding risk free time value of money as 5.5%. Exam answer is based on Black Scholes calculator found at http://www.math.columbia.edu/~smirnov/options13.html using default 20 node tree.  I need to know how to solve this I don’t just want the answer.

Show more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
• 24/7 support
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
• Expert Proofreading
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Order your essay today and save 10% with the coupon code: best10