This thesis deals with capacity expansion and its financing requirements in Korean steel industry through investment project analysis technique. Performing the investment analysis, the most important aspects of consideration are decisions over project life time, uncertainty prevailed for investment projects, and investment project financing.
In order to consider these three aspects at the same time, this study was carried out as followings.
First, the optimal policy for capacity expansion plan was determined by selecting the best alternative from the proposed ones, which gives the maximum NPV, using the planning stage of the computer program PLADE, developed by ROSE, which is based on the decision tree.
Second, A more detailed economic evaluation was done for the selected alternative. Consider 4 point data for each item of all sources of uncertainty, assumping that they have a trapezodial distribution, Monte-Carlo simulation was carried out, using the evaluation phase of PLADE.
Finally, A tentative model which represents firm's funds flow was built for the evaluation of financing requirements.
The results show how much capacity and when to expand, and how much funds are required for that capacity expansion plan. But they are restricitive to apply directly in the reality, because all the analysis are carried out on a crude steel basis.
