Valuation Of Wuyishan National Park

Nowadays,travelling is becoming an important part of individuals’ lives.The prior choice of travelling is Eco-travel.Every year,the increasing number of travelers would visit the forest parks.Many private investors begin to be involved in management of forest parks.They really pay attention to how to run the businesses of forest parks.Furthermore,this management problem is related with the price of forest parks.In many cases,discounted cash flow method has more advantages than other valuation methods,because forest parks that are the combination of land and wood resource own stable land capitals,which also is called future cash flows.This article cites the example that shows the valuation of Wuyishan National Forest Park.It applies discounted cash flow method to evaluate the price of forest park.It creatively comes up the combination of tourism area life cycle and discounted cash flow method.It divides time periods into two parts,development period and stable period.In the development period,the number of tourist is increasing with the stable percentage.By the analysis of data,the estimate model could be built to estimate the future number of tourists.Therefore,future revenue can be calculated by estimating ticket price,deducted from the influence of inflation factors,and forecasting the amount of tourists.In the stable period,National Forest Park would reach the maximum of carrying capability.During this period,the estimate growth rate of tourist would be decreased to 0 or under 0.Consequently,the annual avenue would be limited in the fixed interval.The interest rate or discount rate is the core of discounted cash flow method,related with the success of valuation case.In many cases,experts utilize their experience to determine the value of discount rate.Compared with the judgment of experts,the build-up method is more precise and objective.The Build-Up method is that all kinds of investment in the assets where the risk factors are high are expected to produce high returns.We add risk-free rate and the equity risk premium to get the rate of discount.This article creatively uses the rate of return on equity to calculate the value of the equity risk premium.The result is adjusted by price-to-book ratio to eliminate errors existing between actual value and predicted value.Finally,we eventually gain the sum of present value of net cash flows,which is the result of evaluating the price of Wuyishan National Forest Park.As discounted cash flow is applied in the evaluation of forest park,appraisers can consider applying the rate of return on common stockholders’ equity and tourism area life cycle to the process of valuation.The method not only improves the accuracy of the result,but also avoids the influence of lacking Beta.