Exhausting guide to NC build/upgrade order

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Thread: Exhausting guide to NC build/upgrade order

  1. #1
    Master of Musings mxz's Avatar
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    Exhausting guide to NC build/upgrade order

    It's been talked about a lot on here, but recently I saw a forum member in game who built two Night Clubs before upgrading the first. Previously, I'd seen talk that you should upgrade your first NC to level 3 before building the second. Well, here's more than you wanted to know about why that's a poor idea...and some basic economics mixed in.

    I decided to do Net Present Value and Internal Rate of Return calculations for 3 scenarios over the course of a year (365 days):
    (1) Building two NCs consequtively
    (2) Building one NC and upgrading it to level 2
    (3) Building one NC and upgrading it to level 3

    What is Net Present Value (NPV)? This basically looks at the value of money thru time. A dollar today is worth more than a dollar tomorrow because you could have invested it. When looking at personal finance you generally use the inflation rate to calculate how much your money is/was worth yesterday/today/tomorrow. Businesses use a different rate because they can invest in research/development and are expecting a certain growth rate (say, around 15%). I used a rate of 1% since that's (about) what most CC building upgrade IRRs come out to.

    What is Internal Rate of Return (IRR)? This is basically a calculation of the above mentioned rate when the NPV is 0. A simple way to think about this is if we knew how much milk cost in 1975 and how much it costs now, the IRR calculation would give us the rate of inflation (because the value of milk doesn't really change - like I said, very simplified).

    Why do you use both of them? NPV skews towards bigger investments (or upgrades, in our case). So a Casino's NPV will blow a Sports Bar's away... in the long term the Casino obviously makes more money so that should be easy to understand. IRR, on the other hand, can skew towards smaller investments that pay off quicker. If we looked at the Casino build vs. a Sports Bar build over 50 days the Sport's Bar's IRR would look much better. So we use the two to make sure we get the full picture.

    Assumptions:*
    Discount rate of 1% (like I explained in the NPV, this is *about* what we expect from a standard CC upgrade).
    You could build/upgrade immediately after the previous had finished. This effectively left-shifts the graphs, but in the end it isn't a huge deal since the differences are significant.
    You do no other upgrading/building after this. Essentially that just complicates things; the scope of the exercise is to look at which investment(s) you should make, first.
    You're playing for the long haul...not just a month or two.



    Looking at the IRR chart you really begin to see why going to a level 2 NC is a better investment than the other 2 options. Upgrading to 2 has the quickest positive IRR (you're making money!) and it is also the highest. Remember that we assumed we could do everything right away, so if your IPH isn't stellar (maybe >$200k/hr) the NC1/2/3 curve will be skewed to the right by maybe 20-30 days. Since building another NC and upgrading the first one to 2 are *about* the same cost, there isn't much skew, relative to each other.

    As you can see from the NPV chart: building 1 NC and upgrading to level 3 right away makes you a metric ****ton of money. But also notice that even upgrading it to level 2 and stopping makes you a whole lot of money sooner than building the second NC. Remember that NPV is different than just "breaking even" - it's taking into account other upgrades you could have done with your in-game cash.

    TLDR:
    Once you build your first NC your goal in the game should be to get it to level 2. Once that's done build your second and upgrade it to level 2. After that, ping pong the upgrades so they're similar levels.

    Edit: good suggestion from AFed.
    Quote Originally Posted by AFed View Post
    Also worth noting that this analysis should apply to all type A buildings (modifying payout values a bit).
    So if you're debating any of the ultra low level buildings (House, Tattoo Parlor) or mafia required (Italian Restaurant, Movie Theatre, Loft, Night Club) this strategy applies.
    Last edited by mxz; 09-06-2012 at 12:20 PM.
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  2. #2
    Articulate Author buddylee's Avatar
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    Thanks mxz, that's the way I'm going, but I was going off of previous posts. It's good to see the data behind it...even if I don't completely understand it.
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  3. #3
    Verbose Veteran Murda's Avatar
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    But what about, er.....um, howeva......actually I'm just gonna have to take your word for it.

  4. #4
    Master of Musings
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    But since upgrade and building are not on the same allocation slot , if cash money permits offcourse.

    Upgrading a NC to 3 , while building a NC1 should return the most investment .
    If money is short yes upgrading NC to 3 in the longterm yields the most profit .

    But thanks for the data MXZ

  5. #5
    Master of Musings mxz's Avatar
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    Quote Originally Posted by Dravak View Post
    But since upgrade and building are not on the same allocation slot , if cash money permits offcourse.
    Yeah I guess that's another assumption. Most people don't just build NCs because they have too much money laying around and the NC looks pretty...
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  6. #6
    Master of Musings
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    Well the problem is that "legitly" the building and upgrade takes a long time , so cash flow will always be short .
    Unless time invested , once past the 2 million IPH cash becomes a bit none issue , just time invested and waiting time.

    Should ask Plux / Nicolost they normally love these kind of discussions .
    But maybe you just joined in troubled times and missed the core that likes the discuss these things
    Since am more into gold for stats increase , or gambles for payoff kind of person .

  7. #7
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    Quote Originally Posted by Murda View Post
    But what about, er.....um, howeva......actually I'm just gonna have to take your word for it.
    I'm with you on that, but thanks this analysis. Half saved for my first NC!

  8. #8
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    You are correct - it is exhausting.......lol

    plus I have enough work-related charts to look at so will just take your word for it - but fortunately I already followed your bottom line strategy - built the 1st and levelled it to 2 - now that was exhausting!!

    I am currently building my 2nd - over 100 hours to go. But in between I just had to do other buys and uprgrades - it was ruining the game for me just to focus on these long saves and builds.

    all in all - it's a good building and the benefits to me outweigh the 6 hour collect time - I get most of the money and who cares if I miss some - it's still worth it - and it's PRETTY!!

  9. #9
    Articulate Author buddylee's Avatar
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    I'm two days away from my first NC upgrade. I was struggling with whether I should purchase my 2nd NC or upgrade the first.
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  10. #10
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    Quote Originally Posted by buddylee View Post
    I'm two days away from my first NC upgrade. I was struggling with whether I should purchase my 2nd NC or upgrade the first.
    All the advice - points to upgrading the 1st one - since you almost have the money - stick with that plan. Upgrade isn't as long as the build but don't ask me what it was.........lol

  11. #11
    Consistent Contributor Dwizzy's Avatar
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    Great post Mxz. That's one of the reasons I love this game moreso than any other iPhone game, because you can apply real world finance and investment knowledge to the game to determine the best course of action in the game. It's almost like a practice for making real life investments....almost.

  12. #12
    Prominent Poet Ramshutu's Avatar
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    The night club 1-2 costs 50% more, but nets 100% income over the level 1 NC. In pure maths terms, there is not any debate. The only disparity is that you normally have more ability to build than upgrade. The only way building would be preferable over upgrading to 2, is if it was possible to net more per/hour gain with the 20m difference by upgrading other buildings. If this is true, which is possible due to lack of upgrade bw, you have chosen your upgrade paths poorly as you should have performed this upgrade before the level 1 NC.
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  13. #13
    Master of Musings mxz's Avatar
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    Quote Originally Posted by Dwizzy View Post
    Great post Mxz. That's one of the reasons I love this game moreso than any other iPhone game, because you can apply real world finance and investment knowledge to the game to determine the best course of action in the game. It's almost like a practice for making real life investments....almost.
    Sure, and if you want to get into banking or accounting this sort of exercise is pretty much the foundation of what you'll be doing. A lot of real world application in running a business, too. The nice thing about CC is that it's risk-free.
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  14. #14
    Master of Musings mxz's Avatar
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    Quote Originally Posted by Ramshutu View Post
    The night club 1-2 costs 50% more, but nets 100% income over the level 1 NC. In pure maths terms, there is not any debate. The only disparity is that you normally have more ability to build than upgrade. The only way building would be preferable over upgrading to 2, is if it was possible to net more per/hour gain with the 20m difference by upgrading other buildings. If this is true, which is possible due to lack of upgrade bw, you have chosen your upgrade paths poorly as you should have performed this upgrade before the level 1 NC.
    You mean a 200% income increase...? (577.5k-192.5k)/192.5k

    The other way to look at it is one L2 NC makes 1.5 times the amount two L1s do.
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  15. #15
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    Nice post. Both my NCs have been at level 3 for some time now, but I got them there doing pretty much what it says in the OP.

    I built the first NC, started the upgrade to level 2 and started building the second NC before the upgrade was complete. I did a cheaper upgrade (I forget what) while waiting for the second NC to finish, and when that random upgrade finished I had enough saved to do the second NC level 2 upgrade. That might be the only thing I didn't see in the OP, but I figured it made sense to upgrade that straight away instead of waste time saving another $45M for the level 3 upgrade. By the time the level 2 upgrade was done I was close enough to affording a level 3 upgrade anyways, so it worked out pretty well.

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