CHAPTER 10
Components of Value
IN THE PREVIOUS SECTION, we discussed statistical methods that are used to understand relationships that influence assessment of Strategic Alternatives (SAs). In this chapter, we will begin to lay the foundation for the valuation filter—a quantitative analysis of the value derived from SAs. In Chapter 1, we presented the following rendering of intrinsic value:
Here we discuss intrinsic value in a more formal sense. Our purpose is to understand the components of intrinsic value. The mathematical formula for intrinsic value is:
The formula’s variables are represented as follows:
NPV equals net present value, or ...
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