Task

Write a report to Newbuild plc which appraises the proposed house building project from both a financial and a non-financial point of view, bearing in mind the varying objectives of the counterparties to the partnership. Your report should show how economists would approach the investment decision and the reasoning behind their approach.The report should include the following:

•An explanation of and comparison between time-based and non time-based capital investment appraisal techniques;

•A discussion of how a discount rate is chosen in the case of time-based techniques;

•An analysis of the rationale for taking a welfare approach to the project;

•An explanation of the meaning of externalities and an analysis of the process by which they are assessed;

•An analysis of how the proposed project might fit into an urban growth model (e.g. Hoyt);

•An evaluation of the forecasts made by urban growth models concerning the Newbuild project.