scholarly journals Comparative analysis of the most important economic criteria for the company’s investment projects

2021 ◽  
pp. 125-141
Author(s):  
Vladymyr Iankovyi
Keyword(s):  
Comparative Analysis ◽  
Net Present Value ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate ◽  
Future Production ◽  
Economic Criteria

The theoretical aspects of company’s investment management are discussed. The properties and characteristics of seven main economic criteria-indicators of investment projects, in particular, net present value, profitability index, simple and modified internal rate of return, simple and discounted payback period, efficiency coefficient are considered in detail. The aim of the study is a critical comparative analysis of the most important economic criteria of the company’s investment projects, such as internal rate of return (IRR) and modified internal rate of return (MIRR), their advantages and disadvantages, as well as further development of objective theoretical ideas about properties and relationships criteria for future investments, in particular, between the profitability index (PI) and the modified internal rate of return (MIRR).The economic and mathematical properties of the function describing the dependence of the net present value on the value of the discount rate are studied. The attention of project analysis specialists and top managers of companies is drawn to the shortcomings of the internal rate of return, which, in certain cases, due to the peculiarities of the calculation carries a potential threat of artificially overestimating the efficiency of an investment project. This fact is a significant basis for a complete rejection of using this indicator as a quantitative characteristic of the effectiveness of future production and financial projects. It is proposed to use exclusively the criterion «modified internal rate of return» as an indicator of efficiency of an investment project, which is completely objective, universal and can serve as a basis for calculating the profitability index. A formula of the functional interrelation between the value of the modified internal rate of return and the profitability index of the future production and financial projects of the company is derived.

scholarly journals EVALUATION OF INVESTMENT PROJECTS IN CASE OF CONFLICT BETWEEN THE INTERNAL RATE OF RETURN AND THE NET PRESENT VALUE METHODS

Ekonomika ◽  
2010 ◽  
Vol 89 (4) ◽  
pp. 116-130 ◽  
Author(s):  
Jonas Mackevičius ◽  
Vladislav Tomaševič
Keyword(s):  
Net Present Value ◽  
Investment Project ◽  
Expected Profit ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate

Results obtained by employing the net present value (NPV) and the internal rate of return (IRR) methods allow to objectively determine the effectiveness and attractiveness of an investment project and to compare investment projects differing in scope, length or the amount of expected profit. While results obtained by the NPV and IRR methods normally correlate, contradictions are possible in individual cases. Such contradictions are called ‘conflict between the IRR and NPV methods’. The paper deals with the main characteristics of NPV and IRR, analysing the substance of the conflict and cases of its manifestation. A technique for the resolution of the NPV and IRR conflict is proposed.

scholarly journals Evaluation of Investment Projects: A Case from Turkish Cement Sector

2016 ◽  
Author(s):  
Miyase Karabulut ◽  
Sıtkı Sönmezer ◽  
Vedat Zeki Yenen ◽  
Zeynep Emir
Keyword(s):  
Qualitative Research ◽  
Net Present Value ◽  
Capital Budgeting ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Preliminary Results ◽  
Internal Rate ◽  
Exclusive Or

Capital budgeting is crucial for firms that have projects to evaluate especially when the projects are mutually exclusive or financing is scarce. The aim of the study is to determining the most widely used methodologies in capital budgeting decisions and their effectiveness. A qualitative research will provide cement sector specific examples in assessing industry projects and compares the methods of Net Present Value, İnternal rate of Return, Pay-back period, discounted pay-back period and MIRR. Each method is briefly discussed and its drawbacks and advantages are mentioned in detail. Other sectors are also examined in terms of capital budgeting. Our preliminary results indicate that net present value method dominates capital budgeting decisions in the sectors under study.

New Construction Methodology - A Strategic Approach of Financial and Market Feasibility for Geothermal Cogeneration Plant

2014 ◽  
Vol 984-985 ◽  
pp. 774-783
Author(s):  
Prakash Arul Jose ◽  
Rajesh Prasanna ◽  
Fleming Prakash
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Financial Analysis ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Cogeneration Plant ◽  
Investment Projects ◽  
Internal Rate ◽  
Financial Feasibility

Abstract-While constructing the geothermal cogeneration plant the success of the projects depends upon its financial and market feasibility. A new optimization method is used to estimate financing requirements of investment projects will be presented, as well as a new method to predict the optimal year to sell the investment. A case study is used to illustrate the use of a model to assess the financial feasibility of a geothermal cogeneration plant. The conclusion is that Net Present value , Internal rate of Return and Modified Internal rate of Return should be used to assess financial feasibility of investment projects. In addition to calculating the financial feasibility criteria, assessment models should allow the user to perform sensitivity analysis, scenario analysis, and simulation to analyze risk associated with the investment project. Risk probability matrix is used to obtain the risk priority , which then continued with financial analysis for the feasibility study and also sensitivity analysis. The study shows that the parameter investment value will be increased when treatment is done on risk.Keywords:Financial and market feasibility, Geo thermal cogeneration plant, Environmental Aspects, Sensitivity analysis.

scholarly journals Methodical approaches to the assessment of investment attractiveness of agricultural enterprises

2019 ◽  
Vol 21 (93) ◽  
pp. 63-69
Author(s):  
R. M. Myniv
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Cash Flows ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Agricultural Enterprises ◽  
Internal Rate ◽  
Dynamic Methods

Evaluation of investment efficiency is central to the process of justifying and selecting possible options for investing in investment projects, and is therefore a key to successful implementation of investment activities of agricultural enterprises. The main directions of financing of investment projects of agricultural enterprises are: purchase or construction of unfinished construction objects, new construction, expansion of existing enterprises, reconstruction of existing enterprises and technical re-equipment of existing enterprises. Two main groups of methods of assessing the cost-effectiveness of investment projects have become most widespread: static and dynamic. Static methods involve the calculation of indicators based on undiscounted cash flows. Dynamic methods, on the contrary, take into account the change in the value of money over time and imply bringing the values of all cash flows to the same period by discounting or compounding. Dynamic methods for assessing the effectiveness of investment projects include the following basic methods that rely on most modern Ukrainian enterprises, such as net present value cash flow (NPV), internal rate of return (IRR), payback period (DPP) and project profitability index (PI). On their basis the basic methods of selection of investment projects of agricultural enterprises are formed. Net Present Value (NPV) calculation. is based on comparing what will be invested in the future with what is invested now. The Profitabale Index (PI) is directly related to net present value and is defined as the ratio of the discounted cash flow to initial investment. The IRR (Internal Rate of Return) is the discount rate at which the projected cash inflows are equal to the project's discounted cash flows. As indicators of the effect in calculating the overall efficiency of investments, it is advisable to use changes in the following values of growth: revenue from the sale of enterprise products; gross income; profit before tax; net profit; cash flow; clean products. Gross and net investment should be included in the costs. The use of qualitative methods in investment analysis is due to the following reasons: the subjectivity of the phenomena or characteristics studied; lack or lack of necessary information; inability to analyze objective and acceptable methods; lack of research object (to be created during project implementation). Quantitative methods for evaluating agricultural investment projects include methods of probability theory and mathematical statistics, as well as economic and statistical methods.

scholarly journals The Extent of Using Capital Budgeting Techniques in Evaluating Manager’s Investments Projects Decisions (A Case Study on Jordanian Industrial Companies)

2017 ◽  
Vol 9 (12) ◽  
pp. 175
Author(s):  
Osama Samih Shaban ◽  
Ziad Al-Zubi ◽  
Ahmad Adel Abdallah
Keyword(s):  
Net Present Value ◽  
Research Study ◽  
Capital Budgeting ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate ◽  
Industrial Companies ◽  
Accounting Rate

The aim of this research paper is to study the extent of using capital budgeting techniques on choosing the suitable project for investment. The current research study focused on capital budgeting techniques such as Net Present Value NPV, and Internal Rate of Return IRR, and Pay Back period PB, which is considered the main tools in the hands of decision makers in deciding the best possible alternative of investment. In order to achieve the purposes of the study a questionnaire have been created (based on Graham and Harvey survey in 2001), the aim was to cover most of the Jordanian industrial companies despite of their size and ownership in the current year 2017. Resolution data were analyzed using the statistical program SSPS. Finally, the study concluded that, 58% of Jordanian industrial companies use the Net Present Value, 22% use the Payback Period, 12% use the Internal Rate of Return, and the remaining used a combination of the Accounting Rate of Return, Profitability Index, and sensitivity analysis. The current research study is expected to assess management in choosing the best capital budgeting technique in the evaluation of its future investment projects.

scholarly journals Is It Correct to Use the Internal Rate of Return to Evaluate the Sustainability of Investment Decisions in Public Private Partnership Projects?

2018 ◽  
Vol 10 (12) ◽  
pp. 4371 ◽  
Author(s):  
Vicente De Albornoz ◽  
Antonio Galera ◽  
Juan Millán
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Point Of View ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Economic Point ◽  
Investment Projects ◽  
Internal Rate ◽  
Investment Criterion

Public Private Partnerships (PPP) are viewed by the private sector as investment projects. An investment criterion, such as the internal rate of return (IRR), widely used by practitioners, is thus necessary in order to determine if the opportunity is sustainable from an economic point of view and worth pursuing. However, a cash flow may have multiple IRRs—is it appropriate in the context of PPPs to use this criterion? This paper provides a clear proposition to determine the potential number of real positive IRRs a cash flow may have, depending on the number of sign variations and the value of the net present value (NPV) calculated with a discount rate equal to 0 (NPV(r = 0)). This proposition can sometimes be used when other tests (such as Norstrom’s Criterion) are inconclusive to determine if a cash flow has a single real positive IRR. The proposition is generally met by the typical cash flow of a PPP project, validating the use of IRR as an investment criterion.

ANALISIS KELAYAKAN FINANSIAL INDUSTRI PENGOLAHAN KECAP ANEKA GUNA DI KOTA LANGSA

2017 ◽  
Vol 2 (1) ◽  
pp. 21-30
Author(s):  
Muhammad Jamil ◽  
Januari Frizki Bella
Keyword(s):  
Net Present Value ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Adapun tujuan dari Penelitian ini adalah untuk mengetahui kelayakan usaha industri pengolahan kecap Aneka Guna apabila dilihat dari segi kelayakan finansial. Penelitian ini menggunakan metode studi kasus. Lokasi penelitian yaitu di Kota Langsa dengan pertimbangan bahwa lokasi tersebut merupakan daerah yang terdapat industri pengolahan kecap asin dan mudah di jangkau oleh penulis. Waktu penelitian dilaksanakan pada Bulan Juni - Oktober 2014. Tenaga kerja yang digunakan berjumlah 27 orang, 20 tenaga kerja pria dan 7 orang tenaga kerja wanita. Jumlah penggunaan tenaga kerja selama 5 tahun sebesar 3759 HKP. Total biaya produksi yang dikeluarkan oleh pengusaha dalam usaha pembuatan kecap didaerah penelitian selama 5 tahun adalah Rp. 2.076.988.000,-. Pendapatan kotor yang diperoleh pengusaha sebesar Rp. 8.199.690.000,- dan pendapan bersih yang diperoleh sebesar Rp. 6.122.702.000,-                 Kota Langsa hanya memiliki 1 pengusaha pengolahan kecap asin dan dijadikan sebagai pengusaha sampel yaitu usaha industri pengolahan kecap asin Aneka Guna. Hasil perhitungan di peroleh Net Present Value (NPV) sebesar Rp. 263.281.290 (lebih besar dari nol), sedangkan Internal Rate of Return (IRR) sebesar 84% lebih besar dari tingkat bunga yang berlaku (D.F. = 18%), sedangkan Net B/C Ratio sebesar 3,27 (lebih dari pada 1) dan Pay Back Priod (PBP) 1 Tahun 6 Bulan (lebih kecil dari umur ekonomis).  

EVALUASI TERHADAP PENGELOLAAN SAMPAH DALAM MENINGKATKAN PELAYANAN ASET DI KOTA PEMATANGSIANTAR

2017 ◽  
Vol 13 (3) ◽  
pp. 240
Author(s):  
Novdin M Sianturi
Keyword(s):  
Net Present Value ◽  
Payback Period ◽  
Rate Of Return ◽  
Cost Ratio ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Benefit Cost Ratio ◽  
Internal Rate ◽  
Benefit Cost

Abstrak: Pengelolaan sampah di Kota Pematangsiantar masih bertumpu pada pendekatan akhir (kumpul-angkut-buang), dengan tingkat pelayanan yang rendah, sehingga untuk meningkatkan pelayanan sampah, perlu dilakukan pemilahan di tempat penampungan sementara (TPS). Penelitian ini bertujuan untuk mengkaji sistem pengelolaan sampah dengan melakukan pemilihan di TPS dapat meningkatkan pelayanan aset persampahan sampai tahun  2015 secara teknis operasional dan dari aspek keuangan. Analisa teknis operasional aset pengelolaan sampah mulai dari pewadahan, pengumpulan dan pengangkutan sedangkan analisa keuangan dan analisa kelayakan menggunakan Net Present Value, Internal Rate of Return, Benefit/Cost Ratio, dan Payback Period. Dari hasil analisa tersebut diperoleh suatu sistem pengelolaan sampah dengan pemilihan di TPS berdasarkan zona pelayanan dengan skala prioritas secara bertahap daritahun 2013-2017, dapat meningkatkan cakupan pelayanan sampah eksisting rata-rata 6,69 %, cakupan pelayanan TPS eksisting rata-rata 8,29 %, dan cakupan pelayanan truk pengangkut sampah eksisting rata-rata 12,03 %. Investasinya layak, diperoleh Net Cashflow pada tahun 2020 sebesar Rp 1.720.242.284,-, NPV suku bunga 15 % bernilai positif, IRR > MARR 15 %,  B/C Ratio > 1, dan PP 4,7 tahun, lebih pendek dari periode investasi 10 tahun. Dari Metode penelitian ini maka pengumpulan data, observasi lapangan dan pengukuran contoh timbulan sampah dengan sampel 4 TPS perumahan yang terlayani pengangkutan.

TINJAUAN STUDI KELAYAKAN USAHA BADAN USAHA MILIK DESA (NAGARI) KAMANG HILIA SEJAHTERA KENAGARIAN KAMANG HILIA, KECAMATAN KAMANG MAGEK, KABUPATEN AGAM, PROVINSI SUMATERA BARAT

2018 ◽  
Vol 3 (2) ◽  
pp. 160
Author(s):  
Halkadri Fitra ◽  
Salma Taqwa ◽  
Charoline Cheisviyanny ◽  
Abel Tasman ◽  
Nurzi Sebrina
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Average Rate ◽  
Flow Analysis ◽  
Payback Period ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Penelitian ini bertujuan untuk melihat kelayakan aspek keuangan usaha grosir sembako Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera di Kenagarian Kamang Hilia Kecamatan Kamang Magek Kabupaten Agam Provinsi Sumatera Barat yang dilakukan pada tahun 2018. Penelitian bersifat deskriptif kuantitatif dengan menggunakan metode cash flow analysis, payback period, net present value, profitability index, internal rate of return, dan average rate of return. Hasil penelitian menunjukkan bahwa nilai net cash flow Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera adalah positif yaitu Rp.21.774.000, nilai payback period adalah 1,15 tahun, nilai net present value positif sebesar Rp.10.680.034,47, nilai profitability index adalah positif 1,37, sedangkan nilai internal rate of return adalah 46,7% dan nilai average rate of return adalah 57,23%. Berdasarkan standar penilaian maka semua metode yang digunakan memberikan kesimpulan bahwa usaha grosir sembako milik Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera dalam kategori layak untuk dilaksanakan.

Analisis Kelayakan Finansial Usaha Ternak Ayam Kampung Super (Studi Kasus pada Peternakan Suparlan di Desa Jojog Kecamatan Pekalongan Kabupaten Lampung Timur)

1970 ◽  
Vol 3 (1) ◽  
Author(s):  
Fikri Fathurahman Aziz
Keyword(s):  
Return On Investment ◽  
Net Present Value ◽  
Secondary Data ◽  
Payback Period ◽  
Rate Of Return ◽  
Primary Data ◽  
Cost Ratio ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

This study aims to analyze financially (net present value, revenue cost ratio, internal rate of return, break event point, return on investment and payback period) feasibility of kampung super chicken farming Mr. Suparlan in Jojog village, district Pekalongan, East Lampung regency. The data used in the form of quantitative and qualitative data sourced from the primary data and secondary data which is then analyzed descriptively. Based on the analysis, it is known that kampung super farm is financially feasible to cultivate. This is indicated by the positive value of net present value (NPV) of Rp 186,568,517, revenue ratio (RCR) 1.59, internal rate of return (IRR) of 135.82%, return on investment (ROI) of 43%, and the value of payback period (PP) of 0.50. Keywords: financial feasibility, kampung chicken, chicken farm

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