Question: Consider the modified Think-Big Development Co. case that was addresses in Wednesday's class (January 25 ) with an annual 'Use it or lose it' budget

 Consider the modified Think-Big Development Co. case that was addresses in

Consider the modified Think-Big Development Co. case that was addresses in Wednesday's class (January 25 ) with an annual 'Use it or lose it' budget concept. (a) Distribute the $80 million as $30m, \$20m, $15m, and $15m over the four years then resolve the model and generate the corresponding sensitivity analysis report. (b) Answer the following questions (independently) using the provided information in the sensitivity report only and justify your answers. class problem presented in Section 3.2, including the spreadsheet in Figure 3.3. Use the spreadsheet model and Solver to generate the sensitivity report for this case then answer the following questions (independently) using the provided information in the sensitivity report only and justify your answers. 1. The net present value of project 1 (a high-rise office building) decreases by $5m. 2. The net present value of project 2 (a hotel) increases by $5m. 3. The net present value of project 3 (a shopping center) decreases by $5m. 4. All three changes in parts a, b, and c occur simultaneously. 5. If you have the option of getting additional $2m to use in this Real Estate investment project will you consider getting the additional fund at the beginning of year 3 or 4 , and why? Support your answer. 6. What would be the impact of moving $2m from the allocated budget at the beginning of year 4 and make them available at the beginning of year 3 along with the other $15m ? Explain. 7. Conduct parametric analysis using Solver Table on how the optimal participation shares would vary due to the effect of adjusting the estimated NPV for the Office Building and Hotel simultaneously using the following ranges: OB NPV from 45 to 20m in increments of 5m, and Hotel NPV from 60m to 90m in increments of 10m. Hint: Utilize int(1) function on Excel to eliminate producing decimols in the recommended participotion shares. Then Comment of your Solver toble results using your own words. 8. . Hint: What-if Analysis Part 485 videos in the prerecorded videos section on blackboard

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!