A Study On Investment Decision Basing On BOT Model

With the rapid development of our economy and the improvement of people’s living standards, the development of infrastructure construction has been updated with higher requirements, construction speed and scale enlarging. Since the government has limited financial resources, single financing channels cannot meet the development needs of the situation, taking the city sewage treatment as example. In China, it is commonly known that the water resource per person is very low, with unbalance geographical distribution. With the acceleration of China urbanization and industrialization, the demand for water resource is growing. On the other hand, city population increases, sewage discharge increases, the pressure of clean water environment gradually increase. Under such conditions, the sewage treatment industry is destined to be one of the rapidest industries. Water recycling industry-is equally important to tap water production, water supply, and water drainage. It has been a long time that the construction oi" city sewage treatment infrastructure depends national finance investment, or authorized bank loans from the government departments. But these financing ways still can’t satisfy the requirements of the development of city infrastructure, and the shortage of funds is always plagued sewage treatment industry. Using the BOT model to the construction of city sewage treatment plant, which is internationally adopted, we can better solve the problem of the urgent need for funds while protecting the water environment.This paper brielly introduces the domestic and Ibreign research and application of BOT model and BOT model in china. Based on the full understanding of the mode of BOT and the characteristics of BOT investment mode, comparison was made with the general investment project. The present research investigates on investment decision method basing on BOT model. The author utilizes the Ji’nan Jin’niu Graden water treatment station (a) BOT project bidding as example to analyze the economical aspect of the BOT project from the social capita] angle. First, a detailed analysis of the bidding document was done in order to have a clear focus to the bidding documents. Then, project’s financial index analysis and evaluation was analyzed in detail with the focus of profitability analysis, solvency analysis and economic uncertainty analysis, expected annual profit analysis and loss statement analysis, the cash flow statement, the statement oi assets and liabilities, debt ratio and debt repayment schedule. Finally, it gives a brief analysis to the risk of the project.finally, the study provides theoretical basis and practical experience for companies, which need to utilize the BOI’ model for investment.