Research On The Basic Discount Rate Of Thermo Power Enterprises Based On Improved Three-Factor Model

The industry basic discount rate is necessary guerdon rate that must be achieved when enterprises choose particular investment opportunities or schemes, it is of great significance for enterprises' investment decisions. In 2006, the national development and reform commission, ministry of construction issued the "construction project economic evaluation method and parameters"(third edition), which is used to regulate the economic evaluation and values of relevant parameters of construction projects of our country and has been in use today, and the reference value of investment benchmark discount rate of the enterprises in our country is 8%.In recent years, China's economic and social flourish, the management environment of has been changed dramatically, the basic discount rate of thermal power enterprises in "construction project economic evaluation method and parameters"(third edition) mainly based on the relevant data of 1996-2003, adopted the weighted average cost of capital method(WACC) and the capital asset pricing model, the timeliness of the data and the applicability of the methods are both need further validations. At the same time, at present most of thermal power enterprises blindly adopt these rates as references when setting the necessary return rates of projects in the process of pre-project evaluations, and insufficient project feasibility study and low investment efficiency are widely existed.Therefore, this article recalculated the basic discount using the improved Fama-French three-factor model combining with WACC based on the related data in shanghai and shenzhen stock market during 2008-2014. Through the contrastive analysis of models' applicability, this paper argued that three-factor model had better applicability in yield prediction compared with the traditional capital asset pricing model in the stock market of our country. At the same time, combining with the characteristics of thermal power enterprises, we improved the original three-factor model by add in the investment capital ratio factor, which effectively captured the characteristic risk factor of thermal power enterprises, and the improved model shows good applicability in measuring the equity capital cost of thermal power enterprises. In the end, this article figured out that the present investment basic discount rate of thermal power enterprises is about 10.05%.To prove the accuracy of the calculation results, this article selected the second term expanded project in XL thermal power plant and the capacity-increasing transformation in XB thermal power plant as examples and conducted empirical research, by comparing the internal rate of return and the actual cost of capital rate of the projects, we further verified the accuracy and scientificity of the result. The research result and the methods used in this paper will have good theoretical and practical significance in guiding China's thermal power enterprises to carry out scientific and reasonable investment decision, and also have certain reference value in measuring basic discount rates of other industries combining with their own characteristics.