Engineering Economy – Redevelopment Project Solution | ISYE 6225, Study Guides, Projects, Research of Systems Engineering

Download Engineering Economy – Redevelopment Project Solution | ISYE 6225 and more Study Guides, Projects, Research Systems Engineering in PDF only on Docsity! Redevelopment Project Solution 0 1 2 3 4 5 12.50 18.75 28.13 42.19 63.28 94.92 8.33 12.50 18.75 28.13 42.19 5.56 8.33 12.50 18.75 3.70 5.56 8.33 Project Value Event Tree Without Options 2.47 3.70 1.65 Capital Investment 10.00 11.00 12.10 13.31 14.64 16.11 Maintenance Cost 0.50 0.50 0.50 0.50 0.50 0 1 2 3 4 5 4.12 8.41 16.03 28.88 48.64 78.81 1.47 3.06 6.43 13.49 26.08 1.20 1.20 1.27 2.64 1.20 1.20 1.20 Project NPV Event Tree With Options 1.20 1.20 1.20 The numbers in bold signify the development project should be undertaken. Since the developer could begin development today for an NPV of 2.5 million, and since the value of the development when the delay option exists is 4.12 million, the developer would be willing to pay up to 1.62 million to acquire these options.