Advanced Engineering Economics
Understanding the theories and placing them into practice for Advanced Engineering Economics has led the team to evaluate the time value of money as a practical example of decision making in the Portland, OR., Real Estate market. Using concepts from the course material, this project seeks to formulate a case study in economic decision making based on complex and multivariable options. Rafael, the subject of the case study, is a homeowner who has been offered an opportunity to work overseas and needs to make a decision on what should be done with his current residence. The model formulated to solve the case study considers a number of variables that affect net cash flows, including commissions paid to a realtor during a sale, fees for property management, how profits from a sale may be invested, capital gains taxes that the owner should consider versus the taxes paid on the rental income, and how the mortgage and related taxes are offset by this decision. Time value of money calculations are used to evaluate the options in a comparable present worth state and a recommendation is made based on the optimal projected monetary value of the options that are considered.
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Lamberth, Ross; Krueger, Justin; Rajagopal, Lakshmi; and Marino, Leopoldo, "Rent, Sell, or Else?" (2015). Engineering and Technology Management Student Projects. 198.