Investment with Government Subsidies and Cost Contingency : The Case of Build - Operate - Transfer ( BOT ) Toll Road 1
نویسندگان
چکیده
Investment in toll road normally involves a portfolio of real options. We model a portfolio of real options with cost contingency and government subsidy at the operation stage. We demonstrate that the investment value is highly sensitive to cost and revenue uncertainties. Our numerical example suggests that the investment value of risky project is higher when net income guarantee is used instead of minimum revenue guarantee.
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