Foggy Friday Co. (FFC), a private entity, enters into a service concession arrangement. The terms of the agreement require FFC to: Construct an underground railway system - completing construction within two years; Maintain and operate the railway for 8 years after the completion; Recondition the railway at the end of the 9th year; and Turnover the railway to the government at the end of the 10th year. As consideration, the government pays the operator P80M per year in Years 3 to 10. FFC makes the following estimates at contract inception: Year Contract costs Stand-alone selling price Construction services 1 50 Forecast cost + 20% 2 50 Forecast cost + 20% Operation services 3-10 20 Forecast cost + 40% Reconditioning 10 Forecast cost + 10%% All cash flows are assumed to take place at the end of the year. FFC determines that the implied interest rate in the contract is 33.05%