Institute of Transportation, MOTC

　　This paper utilizes the real options approach to evaluate the project value of the BOT (Built- Operate-Transfer) model for Kaohsiung MRT project under income uncertainty. The BOT project is categorized into the programming, building, and operating stages, according to different risks of incomes. The model uses financial benefit evaluation to provide reference data on optimal capital investment threshold and optimum timing for completing construction for the decision makers. The strategic present value can be found from strategic net present value with flexible value subtracted by net present value with a non-flexible value. This study also aims to compare ROA with net present value method and to provide suggestions in premium distribution from operating earnings for strategic managers.