Research On Investment Decision Of JZ Cinema Project

In recent years,China's film industry has gained unprecedented development opportunities.On the one hand,national policies strongly support the film industry.From 2004 to 2017,the government issued a series of policies and measures to encourage and support the development of the film industry.On the other hand,with the rapid development of the national economy and the rapid increase of people's income,cultural and entertainment consumption has become an important part of residents' consumption,especially watching movies has become one of the main ways of public leisure,which provides a huge growth dividend for the development of China's film market.China is likely to become the world's largest film market in the next five years.At present,China's first-tier and second-tier cities are becoming saturated with cinemas,and the number of screens per 10,000 people is approaching the level of developed countries,but the investment in third-tier cities is becoming a "new continent" for the rapid development of Chinese films.The JZ cinema project proposed in this paper is located in a prefecture-level city in Hubei province,with a population of more than 7 million.Compared with the provincial capital city Wuhan,the number of existing screens and the number of newly added screens in the past two years are less than one sixth of that of Wuhan,Therefore,JZ cinema project has a good investment prospect.This paper is a case study of the JZ cinema project,which aims to help the project to make an optimal choice among the three alternative investment plans within the JZ urban area.To achieve this purpose,based on the reference investment feasibility of a number of related theory and technology method,after the investigation conducted a series of preliminary work,including the combination of JZ project,macroeconomic environment and humane environment,the population of alternative investment location environment,business environment and property characteristics of a comprehensive investigation,and the operating conditions of surrounding competitors to continuous observation and statistics.On this basis,according to the industry experience of JZ cinema project investors,the future operating cash flow of each investment plan is predicted,and the traditional financial standards such as net present value(NPV)and internal rate of return(IRR)are used to make a preliminary comparison of each investment plan.Considering the uncertainty of the future operation of JZ cinema project,this paper,combined with the operation experience of the cinema industry,extracts three major uncertainty factors that lead to the fluctuation of future operating benefits:box office revenue,small sales revenue and marketing expenses,and forecasts the fluctuation range and probability distribution of these three risk factors.Then,Monte Carlo simulation is used to generate a random number sequence of economic benefit indicators of each investment plan,and information about the future economic benefit risks of investment decision-making,and the final optimal investment plan is determined by taking the risk-adjusted investment income as the judgment criterion.