Projects combinations,Complementarity and substitutability among projects, Replacement of asset | Fulbright Economics Teaching Program The Appraisal of development expenditures Lecture 4 2005-2006 INTERDEPENCES AMONG PROJECTS CAO HAØO THI 1 INTERDEPENDENCES AMONG PROJECTS z Projects combinations z Complementarity and substitutability among projects z Replacement of asset 2 Cao Hào Thi 1 Fulbright Economics Teaching Program The Appraisal of development expenditures Lecture 4 2005-2006 PROJECTS COMBINATIONS z n projects: A, B and C z Evaluating 2n combinations ª A ª B ª C ª A,B ª A,C ª B,C ª A,B,C ª Alternative 0 3 COMPLIMENTARITY & SUBSTITUTABILITY 1 + 1 = ? 4 Cao Hào Thi 2 Fulbright Economics Teaching Program The Appraisal of development expenditures Lecture 4 2005-2006 COMPLIMENTARITY & SUBSTITUTABILITY, BENEFITS z Independent PVBI + PVBII = PVBI + ii z Substitute PVBI + PVBII > PVBI + ii z Complement PVBI + PVBII PVCI + ii 6 Cao Hào Thi 3 Fulbright Economics Teaching Program The Appraisal of development expenditures Lecture 4 2005-2006 COMPLIMENTARITY & SUBSTITUTABILITY Benefits Independent Complement Substitute Costs Independent Not Combine Do not interested combine Complement Combine Combine ? Substitute Do not ? Do not combine combine 7 ASSET REPLACEMENT z Keep old asset, do not buy new z Sell old asset, purchase new z Keep old asset, additionally purchase new 8 Cao Hào Thi
