Portfolio-based infrastructure investment strategy for railroad company
Name
50616754-MIT.pdf
Description
Full printable version
Size
8.87 MB
Format
Adobe PDF
Checksum (MD5)
7dbff3e31ff921ae2f00c6f85d34daad
Author(s)
Sato, Takeshi, 1972-
Advisor(s)
Fred Moavenzadeh.
Date Issued
2002
Publisher
Massachusetts Institute of Technology
Abstract
Project based capital investment planning for developing a railroad company's infrastructure facilities does not necessarily allow managers the optimal use of their limited capital resources, because such planning simply focuses on the required cash spending and expected return from the single project. A portfolio based investment strategy aims at increasing or maximizing the value of a company's set of ground facilities, i.e., infrastructure portfolio, through quantifying the impact of strategic investments on the value of a portfolio. This study makes two approaches to the measurement of the value of infrastructure portfolios and the effect of strategic investments. First, strategic investments are considered to add certain economic values to a company, which can be interpreted as residual returns from the portfolio after rewarding its investors. Then, the value of the portfolio is analogous to that of a stock price and its dividend yield. Second, the value of a portfolio can be maximized through finding optimal strategic investment timings and its amounts. Real options approach makes use of the concept of financial option pricing as capital budgeting techniques, and it allows a company to incorporate the value of managerial flexibility in its infrastructure portfolio.
Description
Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2002.
Includes bibliographical references (leaves 126-128).
Subjects
Civil and Environmental Engineering.
MIT Department
Massachusetts Institute of Technology. Department of Civil and Environmental Engineering
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