The Impact Of Inflation On Investment Decisions Of PPP Project

In recent years,More and more public infrastructure projects are implemented in PPP financing mode in China,These projects often have the characteristics of large investment,high financing cost and longer construction period,which make the cost-return of the PPP project more sensitive to the changes of the macro market economic environment,This is especially true of the impact of inflation on its effects,Therefore,it is easy for the project investors to bear the adverse impact of the uncertainty of the project benefit caused by the fluctuation of economic market environment.In China,when the enterprise make a financial budget for various investment projects for a long time,It is customary to ignore the effects of an inflationary economy,and assume the project in a stable economy,prices unchanged macro economic environment.In fact,this approach tends to be out of line with reality.Any country in the process of economic development,inevitably a blaze of inflation,the inflation will affect all aspects of the project investment,such as market,bank deposit and lending rates of overall price level and the investor enterprise fixed assets depreciation amount,so as to affect the project income tax,after-tax net cash flow and other related factors,and these factors is important basis for financial budget of the investment project is to calculate actual internal rate of return,net present value of actual projects such as the key financial indicators.Therefore,to some extent,inflation directly affects the investment decisions of PPP projects.Inflation increases the sale price of items,increases the cost of operating costs,and devalues the cash income of the project.These are the obvious consequences for investment projects.This article first summarizes the connotation and characteristics of PPP project,as well as the concept of inflation,the current situation and the theoretical basis of investment decision.And then further analyze the impact of inflation on project investment environment,and discount cash flow method is used to analysis the inflation to project financial indicators which decisions: net present value and internal rate of return of investment on the impact of contrast are calculated by considering and not considering the effects of inflation in both cases the difference of financial indicators,an urban living garbage incineration power generation more the PPP project as an example to impact on inflation has carried on the concrete explanation.Finally,how to make a reasonable investment decision in the inflation condition is proposed.This article analyses the innovative inflation of the PPP project income tax,to evaluate the impact of financial indicators,such as hope for investors to provide response to inflation project investment decision-making advice...