Investment s efficiency handbook. Theory and practice

CONTENTS 

UNIT 1

INVESTMENTS - CONCEPT, TYPOLOGY, FUNCTIONS / 9 

1.1.  General Theoretical Groundwork for the Concept of Investment / 9

1.2. Typology of Investments / 11

1.3. The Financing of Investments and Their Role within the Economy / 15

UNIT 2

THEORETICAL AND METHODOLOGICAL GROUNDWORK FOR THE EFFICIENCY OF INVESTMENTS / 20

2.1. The Concept of Economic Efficiency / 20

2.2. Forms of Economic Efficiency / 21

2.3. Models of Assessing the Economic Efficiency / 21

2.4.  Stages in Setting up The Investment Decision / 22

2.5. General Description of Economic Efficiency Indicators / 24

2.6. The Economic Analysis and the Financial Analysis – Theme Area and Characteristics / 28

UNIT 3

CLASSES OF INDICATORS USED IN EVALUATING INVESTMENT PROJECTS – STATIC INDICATORS / 31

3.1. The Rate of Return / 31

3.2. The Efficiency Coefficient / 32

3.3. The Economic Yield (Economic Return on Investments) / 33

3.4. The Investment Recovery Time-Span / 33

3.5. The Specific Investment / 35

3.6. Recalculated or Equalised Expenses / 35

3.7. Specific Recalculated Expenses / 36

UNIT 4

CLASSES OF INDICATORS APPLIED IN ASSESSING INVESTMENT PROJECTS - INDICATORS OF IMMOBILIZATION / 37

4.1. The Main Stages in Achieving an Investment Project / 37

4.2. Ways of Phasing Investment Expenses / 38

4.3. Types of Immobilization Indicators / 41

UNIT 5

THE TIME FACTOR AND THE ASSESSMENT OF INVESTMENT PROJECTS  / 43 

5.1. Methodological Issues / 43

5.2. Calculation Formulae Applied in the Net Present Value Technique /43

5.3. The Annual Discounting Rate (a) and the way to establish it / 48

5.4. The Invariance of Efficiency Indicators Irrespective of the Updating Moment / 50

5.5. Applications Resolved / 51

UNIT 6

CLASSES OF INDICATORS USED IN EVALUATING INVESTMENT PROJECTS - DYNAMIC INDICATORS /  56

6.1. Methodological Aspects / 56

6.2. The Investment Recovery Time-Span / 58

6.3. The Used Capital Employed or the Total Updated Cost / 59

6.4. The Updated Unitary Cost / 60

6.5. The Ratio of Total Updated Revenues / Total Updated Costs / 60

6.6. The Net Updated Value or the Net Updated Revenue / 61

6.7. The Profitability Index / 62

6.8. The Internal Rate of Return / 63

6.9. The Adjusted or Modified Internal Rate of Return / 65

6.10. The Dynamic Economic Yield / 66

6.11. Other Indicators Used in Evaluating Investment Projects / 67

6.12. Applications Resolved / 69

UNIT 7

UNCERTAINTY AND RISK IN EVALUATING INVESTMENT PROJECTS / 70

7.1. Uncertainty and Risk Associated with Investment Projects. Risk Factors / 74

7.2. Methods and Techniques for Risk Identification and Assessment / 75

7.3. The Sensitivity Analysis of Investment Project / 77

HOME ASSIGNMENT / 78 

QUESTIONS AND MULTIPLE CHOICE TESTS / 86 

LIST OF REFERENCES / 91