Paper Title
The Analysis of Managerial Flexibility on Financial Feasibility of Power Plant Projects

There are difference in project financial analysis in investing BOT projects and other type of projects. While investing regular projects, the investors will adjust the project scale and chose the right timing for investment according to market conditions. But, it is unchangeable on project scale and timing for investment in BOT projects due to the contract conditions. Thus, the lack of managerial flexibility could make the BOT projects become unprofitable or even become loss in operation. In case, project agent could have the managerial flexibility in operation phase, such as project scale, product types, and product quality level, and allows the project company to adjust project according to the market conditions. Those managerial flexibilities definitely improve the profitability of projects, reduce the probability of bankruptcy, and increase the projects’ value. A project finance evaluation model is used as a base model for financial analysis of the projects. This model is for calculating profitability indices for projects’ financial feasibility analysis. These indices are net present value (NPV), internal rate of return (IRR), debt service coverage ratio (DSCR), times interest earned(TIE), return on asset (ROA), return on equity (ROE), self liquidated ratio (SLR), and payback period (PB). In additions, the sensitivity analysis and Monte-Carlo simulation are performed for determining the expected value and variance of NPV. Eventually, the Black-Sholes option pricing model is used to estimate the option values of BOT projects in considering the managerial flexibility. In empirical study, a power plant project is used for demonstration of analysis. Keywords- Black-Sholes option Pricing Model, Managerial Flexibility, Profitability Indices.