Valuing the Warranty Ceiling Clause on New Mexico Highway 44 Using a Binomial Lattice Model

摘要

In 1998 the New Mexico State Highway and Transportation Department (NMSHTD) agreed to pay $60 million for a 20-year pavement warranty on their Route 44 project (NM 44, now US 550). The warranty includes a ceiling clause that caps total expenditures at $11