BizSugar.com › Startups › How to value you company with the option pricing theory

This short article tries to demonstrate how we can use option pricing theory to value the equity of a company.
The valuation of the equity of a firm in trouble (i.e. one that has large losses and/or a large debt load) can be a very challenging exercise.

So can be the valuation of a new company, a start-up, which is likely to derive the vast amount of its value from the “rights” to a bright idea (e.g. a patent) or a new innovative service. Furthermore, valuation of natural resources companies also pose similar challenges.