MIT1_201JF08_hw_5

MIT1_201JF08_hw_5 - 1.201 11.545 ESD.210 Transportation...

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1.201 / 11.545 / ESD.210 Transportation Systems Analysis: Demand and Economics Assignment 5 Problem 1 Wanna Buy the Brooklyn Bridge? Estimating Uncertainty in a Revenue Forecast The New York City Department of Transportation is considering leasing the Brooklyn Bridge to a private toll-road operator to raise revenues and offload the responsibilities for maintaining and operating the bridge. The consultants on the project, Modeling Bridges Associated (MBA), have used their fancy micro-simulation models to make a prediction for the yearly revenue that the private operator can expect to collect. You are an infrastructure analyst at Fruman Sachs, Inc, the bank providing the financing for the deal. To know what interest rate to charge for your capital, you need to assign some level of risk to this revenue forecast. You have decided to use the method we have learned about in class (Bowman 2003); much of the preparatory work has already been done, you just need to put on the finishing touches. Please download
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