The Effect of Completion Risk and Project Profitability on the Investment Decisions of the Private Sector in PPP Projects

Table 1

Explanations of key parameters.

Notations	Explanations
	The construction cost
	The probability of completion risk
	The accumulative cash flow in time interval
	The risk-neutral expected rate of return
	The risk-free rate
	The volatility rate of cash flow
	The accumulative operation cost in time interval
	The tax rate
	The default loss rate
	The investment boundary when the private sector only uses equity capital
	The investment boundary when the private sector uses both equity and debt capital
	The default boundary when the private sector only uses equity capital
	The default boundary when the private sector uses both equity and debt capital
	The option value of the project
	The option value of equity
	The option value of debt