Risk Analysis Of Return On Owned Capital With Considering Hydropower Project Uncertainties

Hydropower projects have the characteristics of huge investment,long construction period,large construction quantity,complicated construction processes,and are often influenced by many uncertainties,which cause investors great difficulties in making investment decisions.The internal rate of return(IRR)is an important index to analyze the investment income of an enterprise's own capital,and it is the main basis for investors to make investment and financing decisions.However,investment,construction period,electricity price and other factors have significant impact on IRR.Therefore,it is necessary to study the change rule and risk of the owned capital's IRR with considering the uncertainties of the above factors.This is of great practical significance to analyze the economy of hydropower projects and to assist investors in making reasonable investment and financing decisions.The main contents and achievements of the thesis are as follows:(1)Basing on the project schedule network,a method for analyzing the cash flow of owned capital was proposed.The logical relationships among different activities and the method for determining their durations were explained,and the model of hydropower project scheduling based on the work breakdown structure(WBS)technique was built.Furthermore,this thesis presented a method for calculating the annual owned capital during the whole construction period according to the project schedule,and elaborated contents and components of the cash flow related to the owned capital,which makes foundation for calculating its internal rate of return.(2)Basing on the quantitative relationships among electricity price,construction period,investment and the owned capital's IRR,the sensitivity analysis method for the owned capital's IRR with the above factors was presented.Furthermore,this thesis illustrated an application of a certain hydropower project,and obtained the sensitivity degrees of owned capital's IRR on these uncertain factors.(3)Measuring the uncertainties of investment,construction period and electricity price,a method to judge the logical relationship of network activities using Microsoft~?Excel was introduced,and a Monte-Carlo simulation method for risk analysis on the owned capital's IRR was proposed,which can estimate the risk of the owned capital's IRR with considering the uncertainties of investment,construction period and electricity price.It could provide a quantitative basis for investment and financing decision-making.(4)An application of a hydropower project was given to illustrate the probability distributions of the owned capital's IRR under the uncertainties and the assurance rates of the expected IRR of owned capital(i.e.,8%).It is found that the owned capital's IRR is hard to reach 8%when these three uncertain factors happen simultaneously,which indicates that this project has high risk for investors.At the same time,this thesis presented the tables for illustrating the relationships between the owned capital's IRR and investment,construction period and electricity price,respectively,which could provide a convenient tool for quickly calculating the owned capital's IRR under different construction periods,investments and electricity prices.