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Valuing Governmental Support in PPP Projects Using Monte Carlo Simulation: A Case of a Highway Project

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3 Author(s)
Mao Yihua ; Dept. of Civil Eng., Zhejiang Univ., Hangzhou, China ; Yang Guohua ; He Jia

In PPP projects, the investment return level depends largely on the governmental support intensity. Thus, it is necessary to find a way to quantify the value of governmental support. This paper presents an approach that evaluates the governmental support quantitatively under different combinations of types and intensities with Monte Carlo simulation via calculating difference between the Internal Rate of Return (IRR) and the equity expected rates of return (Re). It also provides sensitivity analyses, along with calculation of the threshold of governmental support in specific expected return rates. Finally, a highway project is taken as an example to verify that the application of this approach is reasonable and effective.

Published in:

Computational and Information Sciences (ICCIS), 2010 International Conference on

Date of Conference:

17-19 Dec. 2010