We’re going to use the binomial pricing model to value an American equity option. Essentially, the model uses a “discrete-time” model of the varying price over time of the underlying financial instrument. Valuation is performed iteratively, starting at each of the final nodes, and then working backwards through the tree towards the first node.

http://tech.harbourfronts.com/derivatives/valuing-american-option-using-binomial-tree-derivative-pricing-excel/