TOLL ROAD INVESTMENT UNDER UNCERTAINTY

Phuong Doan and Kanak Patel

ERES from European Real Estate Society (ERES)

Abstract: 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 analysis suggests that the investment value of risky project is higher when net income guarantee is used instead of minimum revenue guarantee.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2010-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2010_423

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