earticle

영어

MRG(Minimum Revenue Guarantee) and RCP(Revenue Cap) agreements in privatized road project have been applied for inducing financial investors to funding process by protecting from downward risk and for comforting government from revenue exploitation resulted from excessive returns during operation. However, levels of these two agreements are inclined to tend to symmetrically choosen during planning phase with axis of expected cash flows, which is gained based on traditional capital budgeting theory, even if there should be reasonable evidence as to how to decide proper levels of those agreements with fair financial principle between private and public entities. Furthermore, as it is possible that conflict of interest from increasing market uncertainty happens between project participants, the levels of MRG and RCP agreements should be fairly considered. To do so, this research is to suggest theoretical frame to evaluate the quantitative values and to determine levels of MRG and RCP agreements in privatized road project with option pricing and related financial economic theories, and thereby, to show some implications.