Modelling and computation of optimal multiple investment timing in multi-stage capacity expansion infrastructure projects

<p style='text-indent:20px;'>So far, the optimal investment timing to maximize total profit of multi-stage capacity expansion infrastructure projects is not clear. In case uncertain demands, multiple stopping time theory adopted model decision-making for in a finite horizon. this context, first-stage project involves dedicated asset later expansion, and at each stage constrained, which makes cash flow exhibit characteristic bull call spread. The upwind difference method multi-least squares Monte Carlo simulation are combined solve value determine exercise boundaries all stages described by sequence demand thresholds. A power plant taken as an example validate model. Through example, strategies provided; effects constraint illustrated. This study novelly reveals effect constraints on using spread theory.</p>