RELEVANT ASPECTS OF PUBLIC INVESTMENTS VALUATION

Recent developments, such as privatization and the private finance initiative, have raised the issue of which assets should be owned by the public sector and whether assets have different values in the public and private sector. In order to answer to this question we make here a parallel between public and private investment under considerations such investment appraisal, valuation criteria, cost of capital and the required rate of return, as well as the risk associated to public-sector investments. Finally we offer an example that highlights some of the considerations presented below.