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Journal of Advanced Transportation
Volume 2018, Article ID 2153536, 9 pages
https://doi.org/10.1155/2018/2153536
Research Article

Cost of Capital Estimation for Highway Concessionaires in Chile

Department of Industrial Engineering, University of Santiago, Chile, Santiago, Chile

Correspondence should be addressed to Juan Pedro SepĂșlveda-Rojas; lc.hcasu@adevlupes.ordepnauj

Received 29 August 2017; Revised 7 December 2017; Accepted 4 January 2018; Published 13 February 2018

Academic Editor: Zhi-Chun Li

Copyright © 2018 Cristian Vergara-Novoa et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In this paper, we present the cost of capital estimation for highway concessionaires in Chile. We estimated the cost of equity and the cost of debt and determined the capital structure for each one of twenty-four concessionaires that operate highways. We based our estimations on the developments of Sharpe (1964), Modigliani and Miller (1958), and Maquieira (2009), which were also compared with the Brusov et al. (2015) developments. We collected stock prices for different highway concessionaires around the world from Google Finance and Reuters’ websites in order to determine the Beta of equity using a representative company. After that, we estimated the cost of equity considering Hamada (1969) and a Capital Asset Pricing Model. Then, we estimated the cost of capital using the cost of debt and the capital structure of Chile’s highway concessionaires. With all above, we were able to determine the Weighted Average Cost of Capital (WACC) for highway concessions which ranges from 5.49 to 6.62%.