Describes a method for evaluation of high-risk, long-term investments, such as in front of venture capitalists. The method involves a prediction of the future value (for example, five years from now) and discounting that the ultimate cost to the present, using a high discount rate (eg 50%). Provides an explanation of the method, including a detailed discussion of the key determinants of factors, ranging from the discount rate on the final price. Pedagogical task is to make students aware of the issues related to the evaluation of the "futures" investment. Model, provided that further sheds light on the determinants of value. "Hide
by William A. Sahlman, Daniel R. Scherlis 52 pages. Publication Date: July 24, 1987. Prod. #: 288006-PDF-ENG
Related Case Solutions & Analyses:
Ducati
Howard Schultz and Starbucks Coffee Company
ICICI Banks Credit Card: Journey to Asian Leadership
TiVo
Alacrity Housing Chennai (B)
Beauregard Textile Co.
Evoe Spring Spa: A Positioning Dilemma
Driving towards a disruption?
Erika James: The Life and Career of an Associate Professor
SULA VINEYARDS
