Optimal Capital Structure Selection Of Highway PPP Projects

In recent years,PPP has been widely used in various countries around the world.It has played an important role in reducing government financial pressure,improving public service quality and efficiency,and promoting economic development.PPP projects often have features such as huge investment,high capital concentration,large number of participants and inconsistent interests.The choice of project capital structure is one of the key factors that can fully attract the participation of social capital,increase the success rate of PPP projects,and achieve multi-win-win situation.In the past,the choice of capital structure was judged and determined in a timely manner according to the specific project conditions.Most of them did not start from the financial characteristics of the project,but mainly focused on qualitative assessment without systematic quantitative research.This paper uses the knowledge of engineering economics,game theory and non-linear programming to study the actual highway PPP project.To build an optimal capital structure selection model that meets the three objectives and needs of the government,social capital,and lenders in the PPP project.With a view to providing a reliable process and basis for the selection of the optimal capital structure of highway PPP projects,the efficiency of project operations for all parties participating in the project will be enhanced and the optimal funding value of all parties will be realized.Firstly,This paper draws a conclusion that domestic and foreign research on the optimal capital structure selection of PPP projects is relatively small and in-depth.This will clarify the research focus and content of this article.By analyzing featuress of the capital structure selection of highway PPP projects in China and the project capital system,combining the economic attributes and financing characteristics of China's highway PPP projects,the highway PPP projects were classified.Considering project government,social capital,and creditor's project interest needs.According to the selection process of capital structure of highway PPP project,the algorithm flow based on Monte Carlo simulation is designed.Then,DCF method is used to forecast and formulate the cash flow during the construction period and operation period of highway PPP project,which is used as the basis for establishing the profit function of each participant in the game model and expressing the relevant feasible financial indicators.The feasibility index of the selected project is used as a constraint on the choice of capital structure.The game tree of capital structure selection is represented by an extended expression.Then a two-stage cooperation game solving model is established based on game theory and linear programming theory.The sub-game 1 and sub-game 2 respectively determine the optimal capital structure and optimal ownership structure of the project.Finally,OptQuest function of Crystal Ball software is used to solve the optimal capital structure and equity structure of two different types of highway PPP projects.Based on the results obtained,the differences in the choice of capital structure between different types of projects were analyzed.Combining the practice of PPP projects at home and abroad,the benefits,costs,and policy factors that have an impact on the choice of capital structure are extracted,and the impact on the choice of the optimal capital structure when the freeway traffic volume changes is simulated.