Estimate the value of a patent using real options. The company acquired the 20-year patent three years ago for $50 milli

[answerhappygod]

Estimate the value of a patent using real options. The
company acquired the 20-year patent three years ago for $50 million
(i.e., cost ofobtaining the patent). The company has not
commercialized the patent, but believes that if it did so today,
itwould cost $3.5 billion and that the present value of future cash
flows on this projectwould be $2.5 billion. The market is changing,
and you have estimated a standard deviation of 25% in thecash flows
on this investment. The risk-free rate is 6.7%.
Estimate the value of the patent as an option.