Flexible Design of Airport System Using Real Options Analysis - MIT

12/14/2007
1.231 Planning and Design of Airport System Dai Ohama
Table 4-4 Analysis Result (Case A)
NPV Static Model (Design A)
Construction Phase Operation Phase
Year
2010 2007 2008 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Demand (Deterministic Projection) 62,233,839 63,366,512 64,486,139 65,592,131 67,353,149 69,114,281 70,874,568 72,633,340 74,389,968 76,143,790 77,894,119 79,640,235 81,381,152 83,116,111 84,463,179 85,795,633 87,113,387 88,416,454 89,704,914 90,978,530 92,237,068
Capacity (Constant) 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000
Revenue (Yen in M) 107,696 110,512 113,326 116,139 118,948 121,752 124,551 127,343 130,126 132,900 135,054 137,185 139,111 139,111 139,111 139,111 139,111
Operating & Maintenance Cost (Yen in M) 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170
Initial Capital Investment (Yen in M) 142,500 142,500 142,500 142,500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cash Flow (Yen in M) -142,500 -142,500 -142,500 -142,500 94,526 97,342 100,156 102,969 105,778 108,582 111,381 114,173 116,956 119,730 121,884 124,015 125,941 125,941 125,941 125,941 125,941
Present Value Cash Flow (Yen in M) -142,500 -137,019 -131,749 -126,682 80,801 80,008 79,155 78,248 77,291 76,288 75,245 74,164 73,051 71,907 70,385 68,861 67,241 64,655 62,168 59,777 57,478
Net Present Value (Yen in M) 678,770
Table 4-5 Analysis Result (Case B)
NPV Model with Flexibility (Design B)
Construction Phase Operation Phase
Year
2010 2007 2008 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Demand (Deterministic ,131 Projection) 62,233,839 63,366,512 64,486,139 65,592 67,353,149 69,114,281 70,874,568 72,633,340 74,389,968 76,143,790 77,894,119 79,640,235 81,381,152 83,116,111 84,463,179 85,795,633 87,113,387 88,416,454 89,704,914 90,978,530 92,237,068
Random Demand 62 ,233,839 57,868,139 65,908,629 38,319,447 62,649,153 96,258,574 105,906,007 107,792,690 40,892,745 70,852,191 107,971,158 67,571,602 102,961,943 115,202,209 103,423,185 54,083,607 108,556,015 89,944,244 51,261,467 122,025,498 82,989,813
Capacity (Constant) 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000
Revenue (YenM) 100,174 139,111 139,111 139,111 65,386 113,291 139,111 108,045 139,111 139,111 139,111 86,478 139,111 139,111 81,966 139,111 132,698
Operating & Maintenance Cost (Yen in M) 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170
Initial Capital Investment (Yen in M) 142,500 142,500 142,500 142,500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cash Flow (Yen in M) -142,500 -142,500 -142,500 -142,500 87,004 125,941 125,941 125,941 52,216 100,121 125,941 94,875 125,941 125,941 125,941 73,308 125,941 125,941 68,796 125,941 119,528
Present Value Cash Flow (Yen in M) -142,500 -137,019 -131,749 -126,682 74,372 103,514 99,533 95,705 38,154 70,343 85,081 61,629 78,662 75,637 72,728 40,705 67,241 64,655 33,959 59,777 54,551
Net Present Value (Yen in M) 638,294
Table 4-6 Analysis Result (Case C)
NPV Model with Expansion Option (Design C)
Ope ration Phase (No Expansion)
Construction Phase Operation Phase with Expansion Optiton
Year
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Demand (Deterministic Projection) 62,233,839 63,366,512 64,486,139 65,592 ,131 67,353,149 69,114,281 70,874,568 72,633,340 74,389,968 76,143,790 77,894,119 79,640,235 81,381,152 83,116,111 84,463,179 85,795,633 87,113,387 88,416,454 89,704,914 90,978,530 92,237,068 93,480,029 94,706,438 95,915,430
Random Demand 62,233,839 39,894,335 54,103,487 51,525,702 76,708,558 90,411,186 78,516,141 85,421,842 58,639,900 53,141,813 101,463,792 81,211,366 116,851,429 99,558,999 80,045,196 46,217,658 76,364,557 94,004,581 71,889,072 85,106,617 118,002,960 108,274,523 116,423,514 134,211,221
Ca pacity (Flexible) 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 87,000,000 121,800,000 121,800,000 121,800,000 121,800,000 121,800,000 121,800,000 121,800,000 121,800,000 121,800,000 121,800,000
Expansion Expand
Build Extra Capacity 0 0 0 0 0 0 0 0 0 0 0 0 0 34,800,000 0 0 0 0 0 0 0 0 0 0
Revenue (YenM) 122,655 139,111 125,545 136,587 93,764 84,972 139,111 129,855 139,111 139,111 127,990 73,901 122,105 150,311 114,949 136,083 188,683 173,128 186,158 194,755
Operating & Maintenance Cost (Yen in M) 12,580 12,580 12,580 12,580 12,580 12,580 12,580 12,580 12,580 12,580 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170 13,170
Initial Capital Investment (Yen in M) 126,255 126,255 126,255 126,255 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Expansion Expenditure (Yen in M) 0 0 0 0 0 0 0 0 0 0 0 48,967 48,967 0 0 0 0 0 0 0 0 0 0 0
Cash Flow (Yen in M) -126,255 -126,255 -126,255 -126,255 110,075 126,531 112,965 124,007 81,184 72,392 126,531 68,308 77,564 126,531 114,820 60,731 108,935 137,141 101,779 122,913 175,513 159,958 172,988 181,585
Present Value Cash Flow (Yen in M) -126,255 -121,399 -116,729 -112,240 94,092 103,999 89,278 94,235 59,320 50,862 85,480 44,372 48,446 75,991 66,306 33,722 58,161 70,404 50,241 58,340 80,102 70,195 72,993 73,674
Present Value Expansion Cost (Yen in M) 0 0 0 0 0 0 0 0 0 0 0 31,808 30,584 0 0 0 0 0 0 0 0 0 0 0
Net Present Value (Yen in M) 686,728
Term Project: Flexible Design of Airport System Page 20 of 22