ecnomics help.

abz · #1 $Old$ January 3rd, 2009, 06:25 AM

a)Consider a situation in which a property developer had to choose between four sites, A, B, C and D for a new housing estate. The major choice criteria were: transport system; cost of land; availability of local labour; soil conditions; and land ownership.

Describe and valuate:
i.A holistic evaluation approach to recommend a site for the property developer to acquire and develop.

ii.Aheuristic elimination approach to recommend a site for the property developer to acquire and develop.

b) A plant hire company is considering buying a new piece of plant, which will be used for five years and then scrapped. Two identical models (A and B) are available. Model A costs £90,000 and has annual operational costs of £10,000. Model B costs £40,000 and has annual operational costs of £20,000. The cost of capital to the company to provide money for the chosen equipment is 10% per year. Which model should the company buy and why? State any assumptions made.

Last_Singularity · #2 $Old$ January 3rd, 2009, 07:23 AM

Quote:

Originally Posted by abz $View Post$

a)Consider a situation in which a property developer had to choose between four sites, A, B, C and D for a new housing estate. The major choice criteria were: transport system; cost of land; availability of local labour; soil conditions; and land ownership.

Describe and valuate:
i.A holistic evaluation approach to recommend a site for the property developer to acquire and develop.

ii.Aheuristic elimination approach to recommend a site for the property developer to acquire and develop.

b) A plant hire company is considering buying a new piece of plant, which will be used for five years and then scrapped. Two identical models (A and B) are available. Model A costs £90,000 and has annual operational costs of £10,000. Model B costs £40,000 and has annual operational costs of £20,000. The cost of capital to the company to provide money for the chosen equipment is 10% per year. Which model should the company buy and why? State any assumptions made.

This question is less of economics than it is really financial management and Monte Carlo Simulation.

How do you propose to solve this problem? What are your thoughts on this?