| Title |
A Study on the Model for Determining the Optimal Risk Premium Considering Project Risk in BTL(Build-Transfer-Lease) Projects |
| Authors |
Park Jin-Woo ; Jeon Rak-Keun ; Kim Jae-Jun |
| Keywords |
BTL(Build-Transfer-Lease) ; Project Risk ; Project Rate of Return |
| Abstract |
The Korean government has initiated private investment in Social Overhead Capital(SOC) as an alternative way of public sector finance delivery in the late 1990s. Build-Transfer-Lease(BTL), a new type of project financing, was included to the government-driven projects in such a direct relation to the welfare facilities as education, culture in 2005. BTL is executed to a sort of project, in which rental fee from final users does not guarantee a certain degree of profit. As a result, the government pays the rent for an elucidated period of time to ensure the profit of private investors according to the project rate of return. Hence, private investors ought to determine the project rate of return which is reasonable in the stage of feasibility analysis. In the progress of the financial viability analysis of BTL, this study has improved the process trying to make an accurate estimate of the fluctuation of diverse variables to have an effect on the profitability and stability of the project. And, this study suggests the model which determine proper risk premium by means of relieving the risk of the project forecasting the risk which could result from compound connections between those variables with a probability process. Also, This study verifies the effectiveness of this model with computer simulation. |