What Value Of The Project Itself Its Spillover Effects On...

Estimated Future State The â€Å"Spillovers† and â€Å"HKSAR valuation† tabs in the attached Excel workbook show how we calculated the value of the project itself, its spillover effects to the HK economy, and the overall net benefit to Hong Kong. We essentially did a traditional discounted cash flow analysis. We had to make assumptions and estimations of the future value of variables such as the HK inflation rate, tourist growth rate, etc. Based on historical data, analyst projections, and market research, these are our best estimates for what the future will hold for the HK economy and our project. To highlight some key calculations from this analysis, the NPV of the project, the NPV of the spillover effects, the NPV of the revenues that the HK†¦show more content†¦These park attendees have other purposes for being in Hong Kong other than visiting HK Disneyland. Due to limited discretionary income, they will spend some of the money that they would have spent in other sectors or at other businesses in the HK economy at HK Disneyland. This is a negative side effect for the economy. We estimated that the crowding out effect would be 10% of per capita spending at the park for local residents and 10% of per day spending for base tourists. In addition, we changed the HK population growth rate to 0%, the rate of inflation to -1% (1% deflation), the tourism growth rate to 3.3%, and the post-2024 cash flow growth rate to -2%. The 3.3% tourism growth rate is the rate recently projected by the Hong Kong Tourist Association for the 2005-2020 period. The 6.48% rate that we used for our best estimate was the historical rate. The 3.3% rate is a reflection of the fact that tourists have lost interest in Hong Kong since the British gave in back to China. Nonetheless, we think that HK Disneyland will result in at least average tourism growth for Hong Kong. Also, we believe that the park probably would shutdown in 2024 in the worst state. Because of this, we did not include ter minal cash flows. We believe the direction and magnitude of these changes in these variables will adequately simulate the worst possible future state of the economy for this project. To highlight some key calculations