Investment Appraisal of Sustainability Projects

Author(s):  
Ria Sinha ◽  
Manipadma Datta

This chapter is an attempt to review the existing approaches in appraising sustainability projects using the conventional approaches of net present value (NPV) and introduce the modified forms of NPV (i.e., net present sustainable value [NPSV]). The chapter also elucidates on the prominent characteristics of sustainability projects and the inadequacy of traditional financial tools in appraising the same. Consequently, the need to transition from using only time value of money as in payback period approach to include opportunity costs as in NPV and furthering this approach to broaden the capital theory of sustainability by including both the time value of money and the opportunity costs has been strongly advocated. In addition to controlling the time value of money, risk-adjusted NPV measures are effective in evaluating sustainability projects. For assessment of renewable energy projects, real option analysis is suggested as an effective measure.

2016 ◽  
Vol 1 (1) ◽  
pp. 71-84
Author(s):  
Misbahul Khoir

The time value of money is associated with the current value and future value because the money received now is more worth than the money received in the future. However, is the concept of time value of money is appropriate and justified by the Shari'ah? The time value of money is a concept that says that the money of the one rupiah that can be received today is more worth than one rupiah which will be received in the future time. The concept of time value of money is needed by financial managers in making decision when will invest in an asset and determine the source of loan funds that will be chosen. Methods for the time value of money pervade; a) the method of average rate of return. This method measures the level of profit gained by an investment. The disadvantage of this method is ignoring the time value of money; b) the payback period method. The method measures how fast the investment return is, the sooner the better; c) method of net present value (NPV). This method calculates quarrel between the current value of investment and the present value of net cash receipts in the future and calculates quarrel between the present value of cash outflow (investment) and cash inflow (income) per year; d) profitability index method (PI). This method calculates ratio between the present value of net cash receipts in the future and the present value of the investment; and e) the methods of internal rate of return (IRR).  If IRR > saving or profit required → decent. Islam views money as a flow concept. Money must rotate in an economy and may not be idle for too long time. Moreover, it lets for years. Islam does not recognize the method of time value of money because this method adds value to money solely with increasing time and not effort. Islam actually knows the money value of time; that is the time has economic value as well as the money value of money. Imam Nawawi provides definition related to value addition for money based solely on the value of time is the category of riba.


2010 ◽  
Vol 51 (1) ◽  
pp. 22-28 ◽  
Author(s):  
Stefan Behringer

Seitdem der Mensch wirtschaftet, triff t er Entscheidungen über Investitionen. Heute hat er dazu ein ausgereiftes Instrumentarium: Investitionen werden mit dem Kapitalwertkriterium in verschiedenen Szenarien, die mit ihren Wahrscheinlichkeiten gewichtet werden, auf Vorteilhaftigkeit geprüft. Der Weg dahin war lang: Die Zeit muss durch den Zins berücksichtigt werden. Allerdings war das kanonische Zinsverbot ein Hindernis auf dem Weg zum Kapitalwertkriterium. Erst Leibniz konnte den Weg frei machen, indem er eine logische Ableitung für die Barwertrechnung vorlegte. Um die Risiken der Investition angemessen zu berücksichtigen, braucht man Wahrscheinlichkeiten. Die französischen Philosophen Fermat und Pascal haben in einem Briefwechsel jeweils eine Lösung entwickelt, die heute in der Szenariotechnik Verwendung fi ndet. Damit die Investitionsentscheidung isoliert getroff en werden kann, bedarf es als letztem Element eines Separationstheorems, welches Irving Fisher Anfang des 20. Jahrhundert entwickelte. Today the Net Present Value rule is widely used in different scenarios, that are weighted with likelihoods to evaluate whether an investment is advantageous or not. The way to that rule has a long history, since investments are done since mankind works together in economies. Interest is needed to account for the time value of money. The canonical ban on interest was an obstacle for the development of the net present value rule, which was resolved only in an essay from Leibniz in the 17th century. The likelihoods were developed by the French philosophers Pascal and Fermat also in the 17th century. As last element of modern investment appraisal Irving Fisher developed the separation theorem, which allows making an investment decision isolated from the surroundings. Keywords: der weg zur modernen investitionsrechnung


2017 ◽  
Vol 6 (2) ◽  
pp. 94 ◽  
Author(s):  
Suryono Suryono ◽  
Ria Azizah ◽  
Edi Wibowo Kushartono ◽  
Raden Ario ◽  
Gentur Handoyo

Kajian Investasi budidaya ikan kerapu di Karimunjawa adalah salah satu usaha guna menumbuhkan promosi investasi di wilayah studi. Kajian ini akan membuat peluang investasi menjadi lebih fokus dan tajam baik dari segi sektor maupun lokasinya, sehingga akan memudahkan investor guna merealisasikan rencana bisnisnya. Studi ini akan memberikan detail informasi kepada investor tentang peluang bisnis pada budidaya ikan kerapu yang sangat layak dilakukan sehingga dapat meningkatkan pertumbuhan ekonomi masyarakat pesisir dan wilayah kabupaten Jepara pada umumnya. Metode yang digunakan adalah metode survei. Peluang Investasi dianalisa secara deskriptif. Hasil kajian menunjukan bahwa berdasakan potensi alam, fasilitas infrastruktur produksi, nilai ekonomi serta aspek financial maka kelayakan investasi adalah sangat prospektif dan berpeluang untuk sukses. Analisis financial menunjukan bahwa investasi pada budidaya ikan kerapu di Karimunjawa adalah sangat layak untukdirealisasikan bagi investor. Budidaya ikan kerapu Tikus (Cromileptis altivelis)adalah paling prospektif, dimana nilai Net Present Value (NPV)> 0,yaitu  1,772,764,729,  dan  Profitability Index  (PI) lebih besar dari  1, yaitu 5,543291036.  Payback Periodadalah  2.82 tahun, jika tidak mempertimbangkan nilai uang (Discount Factors) dan 3.65 tahun  jika mempertimbangkan nilai uang. Sedangkan untuk budidaya ikan kerapu bebek(Ephinephelus fuscoguttatus), Net Present Value (NPV)> 0 yaitu  69,938,924, - dan Profitability Index (PI) lebih besar dari 1, yaitu 1,20558783.  (Pay Back Period) adalah  4,13tahun apabila tidak mempertimbangkan nilai uang (Discount Factor), sedangkan apabila mempertimbangkan nilai uang maka menjadi  and 4.64 tahun. Dari analisis yang dilakukan, maka dapat disimpulkan bahwa meskipun kedua spesies ikan kerapu layak investasi, tetapi ikan kerapu tikuspaling layak investasi, sedangkan ikan kerapu macansebagai produk sampingan investasi, yaitu dengan memanfaatkan sisa pakan yang tidak digunakan dalam budidaya ikan kerapu tikus, sehingga hasilnya akan dapat maksimal. Keseluruhan aspek yang dikaji menunjukan bahwa budiddaya ikan kerapu di Kepulauan Karimunjawa adalah layak investasi. The study of feasibility floating cage culture of grouper fish investment in Karimunjawa is one of the efforts for investment promotion in the studied region. This study will make the investment opportunities become more focus and sharp, both sectoral and location, so it will be easier for investors to execute their investment interest. The purpose of this study, is to provide initial information for investors about business opportunities of grouper fish farming as a very feasible investment opportunities so that can boost the economy of the region and the society of Jepara Regency. The method used in this study was survey  method, descriptive analysiswas conducted to see a of investment opportunities. Based on potential natural resources, location, infrastructure facilities, production, economy value, and financial aspect, the  results of study concluded  that the overall investment is highly prospective and has a fairly high chance to success. The financial analysis showed that investment in grouper fish cultivation in jepara regency is very feasible as a business investment for the investors. Humpback or Polka dot grouper (Cromileptis altivelis) culture is highly prospective and has a fairly high chance. This can be seen from the Net Present Value (NPV) > 0 is equal to 1,772,764,729,  and Profitability Index  (PI) value greater than 1, which is 5,543291036.  While the longer the period the funds invested will return (Payback Period) is 2.82 years if the without considering the time value of money (Discount Factors) and 3.65 years when considering the time value of money. Whereas,  for Brown marbled grouper (Ephinephelus fuscoguttatus), the Net Present Value (NPV) > 0 is equal to  69,938,924, - and Profitability Index (PI) greater than 1, which is 1,20558783. While the longer  period the funds invested will return (Pay Back Period) are 4,13 year if without considering the time value of money (Discount Factors) and 4.64 years when considering the time value of money. From the analysis it can be concluded that all these choices on the investment plan is feasible to run and prospective advantageous. While the best option is an investment plan on investments Humback or Polka Dot grouper (Cromileptis altivelis) cultivation, Brown marbled grouper (Ephinephelus fuscoguttatus) culture whereas it is only a sideline activity and only utilize food wastes are left, so the whole will be able to deliver optimal results in grouper culture.All examined aspects of Grouper cultivation in karimunjawa  gave results that investment activity  is able to be executed. The financial analysis shows that investment in grouper fish cultivation in jepara regency is very feasible to be a business investment for the investors.


2019 ◽  
Vol 2 (1) ◽  
Author(s):  
Darryl Arlen Hartanu Dan Carunia Mulya Firdausy

Up until now, housing investment is still interesting because the demand for housing remains high. Developers are interested to investing in the house sector because of its promising profits. However, it still needs the investment analysis to minimize the risks. Most developers only calculate investment costs compared to the sales plan. The time value of money is often not calculated eventhough costs in the housing sector investments often require many years. This is a feasibilty study based on a house development project in Tangerang Regency,  which developed by PT. TCM. The developer was willing to provide the necessary data for this study including interview such as house design, siteplan, and financial data. From the project’s financial data , we built the cash flow projection and analyzed the investment using Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI)  methods and to find the project Payback Period (PP). The results of this study indicate that the project is feasible to be developed. The result of the analyze showed NPV scored positive to value of Rp 12.061.187.000,- ; IRR is worth 24,58% > interest rate of 10%, IP worth 1,79 > 1, for payback period is reached after 3 years and 135 days.. Thus the housing developments planning by PT. TCM, in Tangerang Regency is worth to be implemented.


2016 ◽  
Vol 1 (1) ◽  
Author(s):  
Misbahul Khoir

The time value of money is associated with the current value and future value because the money received now is more worth than the money received in the future. However, is the concept of time value of money is appropriate and justified by the Shari'ah? The time value of money is a concept that says that the money of the one rupiah that can be received today is more worth than one rupiah which will be received in the future time. The concept of time value of money is needed by financial managers in making decision when will invest in an asset and determine the source of loan funds that will be chosen. Methods for the time value of money pervade; a) the method of average rate of return. This method measures the level of profit gained by an investment. The disadvantage of this method is ignoring the time value of money; b) the payback period method. The method measures how fast the investment return is, the sooner the better; c) method of net present value (NPV). This method calculates quarrel between the current value of investment and the present value of net cash receipts in the future and calculates quarrel between the present value of cash outflow (investment) and cash inflow (income) per year; d) profitability index method (PI). This method calculates ratio between the present value of net cash receipts in the future and the present value of the investment; and e) the methods of internal rate of return (IRR).  If IRR > saving or profit required → decent. Islam views money as a flow concept. Money must rotate in an economy and may not be idle for too long time. Moreover, it lets for years. Islam does not recognize the method of time value of money because this method adds value to money solely with increasing time and not effort. Islam actually knows the money value of time; that is the time has economic value as well as the money value of money. Imam Nawawi provides definition related to value addition for money based solely on the value of time is the category of riba. Keywords: Time value of money, Islamic economics


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