Sprigg Lane (B)
11 Pages Posted: 12 Jun 2009
This case is meant to follow "Sprigg Lane (A)" (QA-0372), which introduces Monte Carlo simulation as a valuation technique. The B case introduces the use of Black-Scholes to treat a capital-budgeting decision as an option. In this case, the decision is whether or not to drill a gas well.
Keywords: capital budgeting, option pricing, security analysis, valuation
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