CNS CASE ANALYSIS: Decision to be made: Jensen has to decide whether to pursue further research in CNS 1575 . Key issues 0 Value whether it is worth pursuing further research o Multiple valuation approaches would be appropriate Business model 0 Intellectual capital is crucial Patents Know-how (retaining key people) 0 Access to basic research 0 Funding 9attractingi capital) 0 Riskiness of the business DCF (DISCOUNTED CF) valuation 0 Does not consider flexibility 0 Volatility of the underlying asset has no influence on value o Extremely difficult to estimate the appropriate discount rate Beta of CNS company Risk-free rate Market risk premium