scholarly journals RANKING EFFICIENCY OF RURAL PROPERTY INVESTMENT PROJECTS USING MULTICRITERIA DECISION METHODS/DAUGIAKRITERINIS KAIMO STATINIŲ INVESTICINIŲ PROJEKTŲ, EFEKTYVUMO VERTINIMAS

2001 ◽  
Vol 7 (3) ◽  
pp. 238-246 ◽  
Author(s):  
Sigitas Lunkevičius ◽  
Leonas Ustinovičius ◽  
Edmundas Kazimieras Zavadskas
Keyword(s):  
Net Present Value ◽  
Economic Effect ◽  
Investment Project ◽  
Fish Products ◽  
Investment Projects ◽  
Partial Ranking ◽  
Key Indicator ◽  
Ranking Criteria ◽  
Decision Methods ◽  
Calculation Results

Many researchers are right considering economic effect of investments as the key indicator, however, ranking other social, ecological and technical indicators of efficiency separately and leaving them outside of investment ranking criteria system. The authors suggest using together all known efficiency criteria plus some specific of rural property: Payback period, Net present value, Internal rate of return, Profitability index, Business perspective, Rural property purchase price, Rural property reconstruction price, Number of workspace, Taxes, Social level of villagers, Fascination of village. Ranking rural property investment project does not mean deciding which criterion is preferred to another one. Therefore in this situation we use ELECTRE IV approach, because it's objective is to rank the options, but without any weighting criteria. The authors have made some alternatives of rural property revival: Heating and airing systems factory, Fish products manufacture, Woodworker manufacture. On the basis of calculation results the following partial ranking of the alternative projects is suggested: Fish products manufacture; Heating and airing systems factory; 3. Rural property; 4. Woodworker manufacture; 5. Sport and leisure centre.

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.

Formation and implementation of regional investment projects in the economic space of the macro-region: Some particularities

2020 ◽  
Vol 18 (7) ◽  
pp. 1232-1247
Author(s):  
V.V. Khomenko
Keyword(s):  
Economic Effect ◽  
Investment Project ◽  
Comprehensive System ◽  
Economic Space ◽  
Investment Projects ◽  
Regional Investment ◽  
Comparison Results ◽  
Original Interpretation ◽  
Case Study Methods

Subject. This article discusses the issues related to the implementation of regional investment projects as an effective tool for investment activities. Objectives. The article aims to develop a comprehensive system for the formation and implementation of investment projects, considering the Sverdlovsk Oblast as a case study. Methods. For the study, I used the methods of logical, statistical, and business analyses, and comparison. Results. The article offers an original interpretation of the concepts of Regional Investment and Regional Investment Project and presents a comprehensive system of forming and implementing regional investment projects in the macro-region. Conclusions. Any investment project can be considered as a platform for attracting investment. It contains resources for a useful economic effect in the future. Regional investment projects are a catalyst for economic growth.

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 Ordered Fuzzy Numbers Approach to an Investment Project Evaluation

2013 ◽  
Vol 4 (2) ◽  
pp. 50-62 ◽  
Author(s):  
W. Konrad Kosiński ◽  
Witold Kosiński ◽  
Kacper Kościeński
Keyword(s):  
Net Present Value ◽  
Fuzzy Numbers ◽  
Probabilistic Approach ◽  
Investment Project ◽  
Order Relation ◽  
Project Evaluation ◽  
Investment Projects ◽  
Decision Supporting ◽  
Decision Supporting System

Abstract Aim of the paper is to propose a new tool for a decision supporting system concerning the financial project evaluation. It is based on the determination of the internal rate of return (IRR) of a investment project in which all expenditure and anticipated incomes are vague, and described by Ordered Fuzzy Numbers (OFNs). It means that the probabilistic approach is neglected in this paper and the use of the well developed arithmetics of OFNs is made to find a positive fuzzy root of a fuzzy polynomial representing the fuzzy net present value of the project. Since in the space of OFNs a partial order relation is defined together with a number of defuzzification functionals, the authors can construct a decision support system for investors helping them in acceptance procedure of most profitable investment projects.

The development of the national system of innovation through investment engineering

2020 ◽  
Vol 16 (7) ◽  
pp. 1317-1334
Author(s):  
S.N. Larin ◽  
E.Yu. Khrustalev
Keyword(s):  
Economic Development ◽  
Economic System ◽  
Economic Effect ◽  
Investment Project ◽  
Financial Flows ◽  
Investment Projects ◽  
National System ◽  
Manufacturing Enterprises ◽  
National Economic ◽  
National System Of Innovation

Subject. To grow steadily and successfully, any economy should improve its mechanism for managing the socio-economic development, which should rely upon scientific approaches, methods and mechanisms. Objectives. The study is an attempt to outline the concept for developing the national economic system of innovation through investment engineering. Methods. The study is based on methods of generalization and systems analysis. Results. We propose a new concept for formulating the modern national system of innovation economics, which poses an investment project as the backbone constituent, being performed by diverse entities and organizations. The system raises the probability that comprehensive investment projects will be successfully implemented, including the reliability of mutual settlements for the sake of the ultimate economic effect. Conclusions and Relevance. The investment concept herein opens new opportunities for a new progressive strategy for the national economic development. Based on investment engineering principles, the economic system will carefully protect all types of property, effectively distribute the national property among federal, regional and local entities, and position regional and local budgets as a set of investment projects or the single investment program for the development of regions and country as a whole. The findings help implement new approaches to developing the national economic system of innovation, which will enhance the performance of manufacturing enterprises and public, collective and private entities. It will contribute to the transparency of financial flows in the non-public sector of economy and considerably curb the informal sector of economy.

Real Options Models for Maintenance Decision Making for Offshore Jacket Platforms

2005 ◽  
Author(s):  
Sandra Santa-Cruz ◽  
Ernesto Heredia-Zavoni
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Structural Reliability ◽  
Net Present Value ◽  
Investment Project ◽  
Cash Flows ◽  
Point Of View ◽  
Investment Projects ◽  
Financial Variables ◽  
Financial Options

Real options models are currently available as one of the best tools for the assessment of investment projects. This is so mainly due to the capability of the real options models to: (1) account for uncertainties in financial variables that are crucial to the investment project; and (2) quantify the value of the possibility to make a decision on whether to defer, abandon, expand or reduce the project at one or several points along time. Recently, some researchers have proposed the use of real options models for the assessment of infrastructure projects for hydrocarbon exploitation from an economics point of view. The objective of this work is to develop real options models for decision making regarding inspection, maintenance and decommissioning of offshore facilities taking into account the financial and technical aspects of the project. In all cases it is considered that at some point in the future, within the service lifetime of the structure, the decision maker will have an option to carry or not an inspection, and take or not a maintenance or decommissioning action, which will determine the structural and financial performance of the project for its remaining lifetime. The in-service times with no structural failure and the rehabilitation times are modeled as random variables. The cash flows are modeled as stochastic processes considering interruption of operation due to repairs after failure. Analytical expressions are derived for the computation of structural reliability and availability depending upon maintenance actions. An example is given for a jacket platform subjected to fatigue deterioration and damage. Simple and compound options of maintenance and decommissioning options are analyzed. The value of the project is computed by means of an approach similar to that of Black and Scholes for financial options [2]. The results are compared to those obtained under the traditional Net Present Value approach.

Decision Making Under Uncertainty in Pipeline Projects Using Monte Carlo Simulation

2004 ◽  
Author(s):  
Claudio de Brito Garcia ◽  
Leandro Bastos Machado
Keyword(s):  
Monte Carlo Simulation ◽  
Monte Carlo ◽  
Risk Analysis ◽  
Capital Investment ◽  
Net Present Value ◽  
Investment Project ◽  
Free Cash Flow ◽  
Investment Projects ◽  
Economical Analysis ◽  
Natural Gas Transmission

Uncertainty about a situation can often indicate risk, which is the possibility of loss, damage, or any other undesirable event. Most people and organization desire low or minimized risk, which would translate to stand to a scenario of high probability of success, profit, or some form of gain. This work shows the importance of risk analysis when it comes to compare two capital investment projects in the natural gas transmission business. A transmission company needs to choose between two alternatives for capacity expansion of a pipeline, with a maximum value for the transmission tariff previously agreed to the shipper. At first, the transmission tariff is calculated by the conventional method that comprises iterative calculation from an arbitrary value, until the project Net Present Value (NPV) reaches zero. Once calculated, the lower of the transmission tariffs associated to the two expansion projects indicates the best choice. That’s the way the majority of companies perform their economical analysis of the proposed problem. Monte Carlo Simulation risk analysis technique is a powerful tool to asses the risk associated to a capital investment project, which can be summarized as the probability of undesired results. The risk calculation is based on the uncertainties associated to the input data used to build the project free cash flow, and the simulation produces a frequency distribution, or histogram, for, the NPV of a project. As will be seen in the work, the investment with the largest expected NPV may not always be the best investment alternative.

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 Assessment of the effect of integration realisation in construction projects

2019 ◽  
Vol 13 (3) ◽  
pp. 254-259 ◽  
Author(s):  
Roman Trach ◽  
Marzena Lendo-Siwicka ◽  
Katarzyna Pawluk ◽  
Nina Bilous
Keyword(s):  
Construction Projects ◽  
Economic Effect ◽  
Investment Project ◽  
Assessment Model ◽  
System Management ◽  
Enterprise Integration ◽  
Investment Projects ◽  
Communication Links ◽  
Information And Communication ◽  
Integrated Project

The aim of the article is to develop an assessment model for the effect received from the integration of enterprises during the realization of investment projects in the construction. Having analysed the existing methods of the economic effect evaluation, we came to the conclusion that it is impossible to use them completely to assess the economic effect of the integration of enterprises during the investment projects in the construction. In the case of an integrated realization of a project in the construction sector, it is the information and communication links that are combined, and not the enterprises themselves. In addition to that, not all models take into account the synergistic effect. To solve the above-mentioned problem, we analysed the advantages gained by participants during the realization of the integrated project in construction and the benefits that have the greatest impact on the synergy effect. The calculation of the effect of the information and communication system management and the innovative nature of the process of its implementation suggest that this process has a clear investment component. Consequently, the process of enterprise integration should be considered as an investment project implemented at the level of network association.

scholarly journals RISK MANAGEMENT METHODOLOGY OF INVESTMENT PROJECTS WITH ENVIRONMENTAL IMPACT

2016 ◽  
Vol 21 (1) ◽  
Author(s):  
ELENA GINDU ◽  
AUREL CHIRAN ◽  
BENEDICTA DROBOTĂ ◽  
ANDY-FELIX JITĂREANU
Keyword(s):  
Risk Management ◽  
Environmental Impact ◽  
Net Present Value ◽  
Investment Project ◽  
Project Schedule ◽  
Investment Projects ◽  
Risk Of Failure ◽  
Impact Risk ◽  
Risk Management Methodology ◽  
Legislative Changes

In projects, a strategic component is to identify all risks that might influence their success, prevent and manage them effectively. Risk management is essential to add value to an investment and improve results. With the economic and financial crisis in recent years, increasingly, more companies have realized the importance of using a system of risk management, given the multitude of variables that can influence the success of a project. These include: legislative changes, global political and economic instability, natural disasters, climate change, human resources, liquidity risk, environmental impact, risk of erroneous calculation of total project costs, risk of failure into initial project schedule, prolongation risk, the risk of failure of internal rate of return (IRR) and net present value (NPV) etc. The study proposes a new method of risk assessment and management in the investments projects with environmental impact and its application in a case study. The method will take into consideration besides the economic and financial indicators, hard to be understood by smaller investors, a set of simple and important questions that they have to analyze before deciding to start an investment project. The new methodology will have a comprehensive approach from identifying the investment opportunity, writing investment project until its implementation. This will take into account macroeconomic variables and the microeconomic environment that can influence the success of project implementation. The main advantage of applying the new methodology are: knowing all the variables that influence the success of a project realization; awareness of the importance of applying an effective risks management related to investment projects with environmental impact, increasing the quality and success of projects.

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