Methods for evaluating the effectiveness of investment projects - a way to help determine the feasibility of capital investments for the long term in a variety of assets.With the help of these experts can predict the return on projects, as well as the size of future profits.Therefore, each investment object must be carefully analyzed in order to reduce possible risks.
widely used methods for assessing the effectiveness of investment projects based on a comparison of profitability.When a person chooses between multiple objects, you must assume in advance the possible profits.The same applies to the selection of the bank.Investor know in advance in which higher interest rates, and selects the most profitable option for a profit.
techniques assessing the effectiveness of investment projects implemented in all countries of the world.The most frequent analysis is carried out using 5 methods that combine the two groups.The first includes methods based on the use of the principle of discounting:
- method, which is determined by the net present value;
- methodology, including the calculation of profitability of investment and internal rate of return.
The second group comprises the three methods.They are called traditional or simply because they do not use the concept of discounting:
- method based on the calculation of the payback period;
- annual method (design, calculation, average) rate of profit;
- the way in which the break-even point.
Methods for assessing the effectiveness of investment projects on the basis of discounting.Let us examine more data techniques.Discounting - is a special way to the analysis of investment projects, in which the expression of future cash flows through the term the price at the current time.Thus, we consider how much the investor will receive in connection with the sale of the object as a result of inflation.Methods for evaluating the effectiveness of investments, which are based on the principle of the discount used in investing money in the large long-term projects.
consider a second group of methods.Methods that do not include the principle of discounting, also referred to as statistical.They are based on the plan, design and the actual data on costs and outcomes.When using methods of assessing the effectiveness of investment projects, have resorted to the calculation of average data for the whole period of investment.This technique experts use when costs and benefits are unevenly distributed over the years.
If the evaluation of the project does not apply the principle of discounting, the expert does not consider the time factor.It lies in the fact that under the influence of inflation, the depreciation of money occurs.At the same time it becomes difficult comparative analysis of actual and design data over the years.Thus, the efficient use of statistical methods in cases where the implementation of the investment project takes no more than five years.The payback period is small and the costs are often the results are evenly distributed over the period.
Statistical methods are widely used in practice.This is due to the fact that they are fairly easy to grasp and readily available.Specialists companies can quickly to calculate the effectiveness of projects.The data used for the evaluation are available.But statistical methods have several disadvantages: ignoring the time factor, the coverage for a short period of investment, the uneven distribution of cash flow throughout the period of operation of the project.
skilled in selecting methods of assessment should consider the type of industry, the specifics of the project, innovations, inherent in it, and other important factors.All this has a positive or negative influence on the final result obtained from investments.
