Economic Study On Expansion Project Of Fokai Expressway

This article use Fokai Highway as the object of study. We clarify the necessity of theHighway from its social status and historical operations. Then forecast the key variable-thevolume of traffic to determine the expansion of scale, calculate the total cost of theproject. Based on the total required funds, we arrange investment and financing of funds.35percent of the total funds comes from capital,65percent comes from bank borrowings.This article evaluate the economic benefits of the project from the financial point of viewand the national economy point of view. The financial evaluation show that the project’sfinancial internal rate of return(22years) is less than the consolidated loan interest rate; Theproject’s financial net present value is less than zero; The payback period of the project ismore than22years; Loan repayment period is about nine years (including constructionperiod); Incremental loan repayment period is about19years (including constructionperiod). This program have a greater investment risk. It may not be able to recover theinvestment in the evaluation period.The project have not a certain ability to resist risks in thefinancial until the operating period is extended to the year of2041(evaluation period of36years).National economic evaluation show that the project’s economic internal rate of return ishigher than the social discount rate(10%); economic net present value greater than zero,which indicates that the project is feasible from the national economy point of view.Thesensitivity analysis of this project reveals that this project has a certain ability to resist risks.In short, the project is feasible from the perspective of the national economy, but it is notfeasible from a financial point of view. But this project is the country’s major infrastructureprojects, the Government still consider the construction of this project.