This paper provides an example of the valuation of a "real option" in a large-scale infrastructure project. The Transurban City Link project in Melbourne, Australia, is a major project involving the financing, construction, operation and maintenance of 22 kilometers of toll-roads. Two...

Purpose: As one of the most important overhead capital of urban economics and social development, the sustainable development of urban infrastructure is becoming a key issue of prosperous society growing. The purpose of this paper is to establish a basic model to analysis certain infrastructure...

Monte Carlo simulation and geometric Brownian motion are the two methods employed for valuation of guarantees in public-private partnership projects. In this article we argue that any guarantee within the projects that exhibit non-constant growth rate of demand should always be evaluated by...

We study the effects of granting an exit option that enables the private party to early terminate a PPP project if it turns out to be loss-making. In a continuous time setting with hidden information about stochastic operating profits, we show that a revenue-maximizing government can optimally...