Conference Session

Using a Real-Options Analysis Tutorial in Teaching Undergraduate Students

Collection

2016 ASEE Annual Conference & Exposition

Authors

John A. White Jr., University of Arkansas

Tagged Divisions

Engineering Economy

) = 0.43007, and C = 55(0.59796) - 58.50(0.43007)/e2(0.0392207) = $9.633. In Problem 1, suppose the price of the stock will either increase 10% or decrease 10% during the year. What is the maximum amount you would be willing to pay for the option? (Use the binomial option pricing model described in class in arriving at your answer.) Answer: $3.65 S = $57.00, K = $58.50, u = 1.1, d = 0.9, rf = 4%, T = 2. Therefore, q = (1.04 - 0.90)/(1.1 - 0.9) = 0.7.4. A company is considering making an initial investment [CF(1)] to test the market for a new product. Depending on how well the product sells, it can expand the production capacity with a $350M investment [CF(2)] in year 5 and enter the market in year 6 with a full-scale marketing effort

Conference Session

Engineering Economy Division Technical Session 1

Collection

2016 ASEE Annual Conference & Exposition

Authors

Paul C. Lynch, Penn State University Erie, The Behrend College; Joseph Wilck, United States Air Force Academy; Omar Ashour, Pennsylvania State University Erie, The Behrend College

Tagged Topics

Diversity

Tagged Divisions

Engineering Economy

More Q&A, Communication, or more 16 communication time with sponsorTable 2: Summary of Sponsor Engineering Economy Case Study Feedback Questionnaire Data. Question Frequency Answers Where do you spend most of your 3 Field Engineering Manager time in your current position 5 Distribution Center (circle only one)? What are the main reasons (goals) Branding of Company and talent acquisition/ future 6 for partnering with Penn State IE candidates. Industrial