DEFINITION of 'expansion choice' Information:
Expansion choice - the enclosed choice which resolves firm which bought a real choice which is the right to take certain actions, to expand his actions in the future at the minimum cost. The expansion choice, unlike typical options which receive their cost from the main safety, receives the value from flexibility which it provides the companies. As soon as the initial stage of the capital project was carried out, the holder of a choice of expansion can solve whether promote with the project.
From the point of view of real estate options of expansion provide to tenants a choice to add more space to their living room.
2019 - Expansion choice
Expansion choice, Information - 2019
DESTRUCTION of 'expansion choice' Information:
For example, if the company isn't sure concerning, whether there will be her recently entered product is successful in the market, it can buy an expansion choice. The choice of expansion will allow firm to estimate an economic situation in the future and to define, whether profitable to continue to develop a special product. If the firm originally expected to make 1.000 units, five years, carrying out a choice of expansion would allow them to buy the additional equipment to increase ability for the price which is cost below market price. If economic conditions are good, and expansion is desirable, the choice will be carried out. Otherwise, the choice of expansion expires.
As options of expansion are applied in real estate
From the point of view of real estate the choice of expansion will include, as a rule, restrictions and agreements of any efforts of the tenant to make wider use of property. For example, temporary restrictions could be set on any projects of expansion, having limited the tenant to a certain window to finish their efforts.
In office complex, for example, the tenant can want to take more space to adapt considerable new additions to staff. The tenant can give some weeks to have the construction teams adapting a construction interior to allow the expanded building plan. Conditions of a choice of expansion could also include changes of a rent of tenants to reflect a bigger trace which will be occupied by the tenant as soon as work is complete.
There can also be agreements based on whether other tenants already pursued an expansion choice which could eliminate others from search to increase their space. The tenant could also want to build more buildings, not only office within the building, on property. Plans concerning expansion can be limited to proximity to other features, installations and the tenant's space which already is in a place.
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