Table 1 Base case for hypothetical simulation

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

10 years

Time interval

Δt

1 year

Operational cost

c

0.85 MU (monetary unit)

Royalty fee

δ

10 %

Discount rate

d

6 %

Cost of acquisition

K

1