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Table 5 Option value for GBM

From: Consumer value of fuel choice flexibility - a case study of the flex-fuel car in Sweden

 

Results

Discounted costs for gasoline

221 479 SEK

Discounted costs for ethanol

202 765 SEK

Discounted costs for min[gasoline, ethanol]

183 625 SEK

Value of Switching option

37 854 SEK

Option value – option price (flex-fuel premium)

= 37 854–6 000 = 31 854 SEK

Net value + plus subsidy

= 31 854 + 10 000 = 41 854 SEK