Corporate Valuation Model In A Stochastic Framework

In this paper we present a corporate valuation model, which integrates the different approaches of various fields of finance in a single stochastic framework. We construct a stylized company, which has its explicit production, inventory, export and import activity. In our simulation we analyze the affect of the future volatility of three stochastic factors (production, inflation and exchange rate) and their correlations on the distribution of the current value of the firm. Furthermore we investigate the added value of the possibility of early termination of the project.