Financial Subsidy Mechanism Of Urban Rail Transit

The inherent attribute of urban rail transit determines that it needs government subsidies. In the section of construction and pre-operation, the rail transit required larger amount of subsidy. The financial subsidy mechanism of urban rail transit is different among short, medium and long-term. This paper focuses on how the Government should arrange subsidies in the long term. By introducing the capital asset pricing model, we presented the government-led urban rail transit financial subsidy mechanism, while take time value of money and capital investment diversity full into consideration. Specific research line as follows:First, determine the expected return of urban rail transit project(which can describe as the average annual return on capital), and secondly, to determine the project’s weighted cost of capital(including principal, interest and other costs of different investment projects), then, determine the urban rail transit future net cash flows, and finally, in conjunction with urban rail transit project revenues and costs, calculated the need of subsidies for rail transit enterprise. Apply the financial subsidy mechanism to Beijing Railway; we can give roughly subsidies of each rail transit line.