From: Franchise ownership redirection: real options perspective
Parameter | Notation | Value |
---|---|---|
Revenue at t = 0 | X0 | 1 MU (monetary unit) |
Revenue initial drift | μ0X | 0 |
Revenue volatility | σX | 9 % |
Agency costs at t = 0 | A0 | 0.15 MU (monetary unit) |
Agency costs initial drift | μ0A | 0 |
Agency costs volatility | σA | 7 % |
Contract period | T | 10Â years |
Time interval | Δt | 1 year |
Operational cost | c | 0.85 MU (monetary unit) |
Royalty fee | δ | 10 % |
Discount rate | d | 6Â % |
Cost of acquisition | K | 1 |