A syndicate of funds had just approached the manager of a billion dollar hedge fund in order to interpret her agenda in an attempt to buy RamSync Inc., a Silicon-Valley maker of memory chips. With the use of a contemporary DCF analysis (APV approach), the supervisor fast decides that at a price of $900 million, RamSync has a negative NPV of $33 million.
Yet, purchasing RamSync, which currently makes SDRAM, would permit the owner to enter the much-hoped-for MRAM market at a future interval in time. The manager is now forced to reconsider the best way to value the concealed call option it has on the MRAM market being considered by RamSync.
Publication Date: 08/12/2005
This is just an excerpt. This case is about Finance
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