EG Nepomnyashchy Economic evaluation of investments. Coursework: Accounting for uncertainty and risk in evaluating the effectiveness of investment projects An integrated assessment of the sustainability of an investment project as a whole

22.05.2022

7. ACCOUNTING FOR UNCERTAINTY AND RISK IN ASSESSING THE EFFICIENCY OF INVESTMENT PROJECTS

7.2. Consolidated assessment of the sustainability of the investment project as a whole

When using this method, in order to ensure the sustainability of the project, it is recommended:
- use moderately pessimistic forecasts of technical and economic parameters of the project, prices, tax rates, exchange rates and other parameters of the economic environment of the project, production volume and product prices, deadlines and costs of certain types of work, etc. (at the same time, positive deviations of these parameters will be more likely than negative ones);
- provide for reserves of funds for unforeseen investment and operating expenses due to possible errors of the design organization, revision of design decisions during construction, unforeseen delays in payments for delivered products, etc.;
- increase the discount rate in the calculations of commercial efficiency by the amount risk adjustments (see 5.2.1.6.5).

7.3. An aggregated assessment of the sustainability of the project from the point of view of its participants

The sustainability of the IP from the point of view of the enterprise - a participant in the project, with possible changes in the conditions for its implementation, can be generally checked based on the results of calculations of commercial efficiency for the main (basic) scenario of the project implementation by analyzing the dynamics of real money flows. In this case, real money flows included in the calculation are calculated for all types of activity of the participant, taking into account the conditions for granting and repaying loans.

If an accident is possible at one or another step of the billing period, the liquidation of the consequences of which, including compensation for damage, requires additional costs, the cash outflows include the corresponding expected losses . They are defined as the product of the costs of eliminating the consequences of an accident by the probability of an accident occurring at a given step.

For an aggregated assessment of the sustainability of the project, indicators of the internal rate of commercial return and the index of return on discounted investments can be used. At the same time, the IP is considered stable if the value of GNI is large enough (at least 25 - 30%), the value of the discount rate does not exceed the level for small and medium risks, and loans at real rates that exceed GNI are not expected, and the index of return on discounted investments exceeds 1.2.

Subject to the requirements of Sec. 7.2 to the parameters of the main scenario for the implementation of the project, the project is recommended to be assessed as sustainable only if there is a certain financial reserve. Taking into account that the free financial resources of the enterprise include not only the accumulated balance of cash flow from all types of activities, but also the reserve of funds as part of the assets of the enterprise, the condition for the sustainability of the project can be formulated as follows.

At each step of the calculation period, the sum of the accumulated balance of cash flow from all types of activities (cumulative effect) and financial reserves must be non-negative.

To implement this recommendation, it may be necessary to change the norms of the financial reserve provided for by the project, to provide for deductions to reserve capital, or to adjust the project financing scheme. If such measures do not ensure the fulfillment of this requirement, a more detailed study of the impact of uncertainty on the feasibility and effectiveness of the IP is necessary (see below).

7. ACCOUNTING FOR UNCERTAINTY AND RISK IN ASSESSING THE EFFICIENCY OF INVESTMENT PROJECTS

7.2. Consolidated assessment of the sustainability of the investment project as a whole

7.3. An aggregated assessment of the sustainability of the project from the point of view of its participants

At each step of the calculation period, the sum of the accumulated balance of cash flow from all types of activities (cumulative effect) and financial reserves must be non-negative.

MINISTRY OF EDUCATION AND SCIENCE OF THE RUSSIAN FEDERATION

Bronnitsky branch

State educational institution of higher professional education

"Moscow Automobile and Highway State Technical University (MADI)"

Faculty: Economics

Specialty: Economics and management at the enterprise (transport)

Discipline: Economic evaluation of investments

Course work

"Determining the payback period, economic sustainability and profitability of an investment project"

5th year students

Vereshchagina D.O.

Group: EA-09-D

Lecturer: Syutkina T.N.

Bronnitsy 2013

INTRODUCTION

1. Theoretical aspects of determining the payback period, economic sustainability and profitability of an investment project

1 Payback period. Payback period determination

2 Economic sustainability. Her definition

2.1 Consolidated assessment of the sustainability of the investment project

2.2 Calculation of break-even limits

2.3 Method of parameter variation. Parameter limits

2.4 Evaluation of the expected effect of the project, taking into account the quantitative characteristics of uncertainty

3 Profitability of the investment project. Determining the profitability of an investment project

Calculation of the efficiency of the organization of transportation on new routes of ATP

CONCLUSION

LIST OF USED SOURCES

INTRODUCTION

One of the most important areas of activity of any enterprise is investment activity.

The initial condition for investing capital is the receipt in the future of economic returns in the form of cash receipts sufficient to reimburse the initially invested capital costs during the period of the investment project.

In the general sense, an investment project is a specific event in which funds are invested in order to make a profit or increase capital.

To judge the attractiveness of any investment project, four elements should be considered:

the volume of costs - investments;

potential benefits in the form of cash receipts from economic activities;

the economic life of the investment, i.e. the period of time during which the invested project will generate income;

any release of capital at the end of the economic life cycle of an investment is a salvage value.

An economic analysis of these four elements makes it possible to assess the attractiveness of an investment project.

1. Theoretical aspects of determining the payback period, economic sustainability and profitability of an investment project

1 Payback period. Payback period determination

This indicator determines the period during which investments will be “frozen”, since the real income from the investment project will begin to flow only after the payback period has expired. On the investor's side, this is the time it takes for the investment to generate sufficient cash flows to recoup investment costs. When selecting options, preference is given to projects with the shortest payback period.

It is advisable to calculate the payback period indicator for projects financed from long-term obligations. The payback period for the project must be shorter than the period of use of borrowed funds, established by the lender.

The indicator is a priority if the main thing for an investor is the fastest possible return on investment, for example, the choice of ways to financially recover bankrupt enterprises.

Also, the payback period is of particular importance for a business located in countries with an unstable financial system, or a business associated with advanced technology, where rapid product obsolescence is the norm, which makes the rapid recovery of investment costs an important problem.

The disadvantage of this indicator is that the calculations ignore the income received after the proposed payback period of the project, and also does not take into account the change in the value of money over time. Consequently, when selecting alternative projects, serious miscalculations can be made if only this indicator is used. The use of this indicator for the analysis of the investment portfolio as a whole requires additional calculations. The payback period for the portfolio as a whole cannot be calculated as a simple average.

The advantages of the payback period include the relative ease of calculation and time savings when making an investment decision, as well as the ability to choose the least risky project (in practice, the longer the project implementation period, the higher the degree of risk).

To calculate the payback period, do the following:

The accumulated discounted cash flow is calculated until the first positive value is obtained;

Determine the payback period using the formula.

The general formula for calculating the payback period of an investment is:

under which , (1)

where Current (PP) - payback period; - number of periods;

CFt- cash inflow in period t;

io- the value of the initial investment in the zero period.

In the case of uniform receipts of net profit, it is calculated as follows:

where I - the amount of investment costs aimed at the implementation of the project;

D - the amount of net cash flow for one period (one year) of operation

In case of uneven receipt of net profit, the payback period is calculated as follows:

, (3)

where is the consecutive number of periods (years) during which the investment contribution remains uncovered;

The period in which the investment costs are covered;

Part of the amount of net profit of the period n + 1, necessary to cover investment costs;

The total net income of the period.

The standard payback method does not take into account the time value of money, but by discounting the cash flow, this shortcoming is eliminated. In the case of a uniform cash flow, the discounted payback period is calculated as follows:

, (5)

where - the amount of investment costs aimed at the implementation of the project;

The life of the investment project;

Discount rate.

In the case of uneven cash flow, the payback period is calculated in two stages:

Finding consecutive values of cash flow for each interval separately;

- finding the discounted payback period of the project.

1.2 Economic sustainability. Her definition

investment project profitability payback

The project is considered sustainable if, under all scenarios, it turns out to be effective and financially feasible, and possible adverse effects are eliminated by measures provided for by the organizational and economic mechanism of the project.

In order to assess the sustainability and effectiveness of the project under conditions of uncertainty, it is recommended to use the following methods (each of the following methods is more accurate, although more time-consuming, and therefore the use of each of them makes the use of the previous ones unnecessary):

) coarse-grained stability assessment;

) calculation of break-even levels;

) parameter variation method;

) assessment of the expected effect of the project, taking into account the quantitative characteristics of uncertainty.

All methods, except for the first one, provide for the development of scenarios for the implementation of the project in the most probable or most dangerous conditions for any participants and the assessment of the financial consequences of the implementation of such scenarios. This makes it possible, if necessary, to provide in the project for measures to prevent or redistribute the resulting losses.

change the size and/or terms of loans;

provide for the creation of the necessary reserves, cash reserves, deductions to the additional fund;

adjust the terms of mutual settlements between project participants;

provide insurance for project participants for certain insured events.

In cases where the project remains unsustainable even with these adjustments, its implementation is recognized as inexpedient if there is no additional information sufficient to apply the fourth of the methods listed above. Otherwise, the decision on the implementation of the project is made on the basis of this method without taking into account the results of all previous ones.

1.2.1 Consolidated assessment of the sustainability of the investment project

When using this method, in order to ensure the sustainability of the project, it is recommended:

use moderately pessimistic forecasts of the technical and economic parameters of the project, prices, tax rates, exchange rates and other parameters of the economic environment of the project, production volume and product prices, deadlines and costs of certain types of work, etc. (at the same time, positive deviations of these parameters will be more likely than negative ones);

provide for reserves of funds for unforeseen investment and operating expenses due to possible errors of the design organization, revision of design decisions during construction, unforeseen delays in payments for delivered products, etc.;

increase the discount rate in the calculation of commercial efficiency by the amount of the risk adjustment.

The stability of the investment project from the point of view of the enterprise - participant of the project, with possible changes in the conditions for its implementation, can be enlarged by the results of calculations of commercial efficiency for the main (basic) scenario of the project implementation by analyzing the dynamics of real money flows. In this case, real money flows included in the calculation are calculated for all types of activity of the participant, taking into account the conditions for granting and repaying loans.

If an accident is possible at one or another step of the calculation period, the liquidation of the consequences of which, including compensation for damage, requires additional costs, the corresponding expected losses are included in the cash outflows. They are defined as the product of the costs of eliminating the consequences of an accident by the probability of an accident occurring at a given step.

For an aggregated assessment of the sustainability of the project, indicators of the internal rate of commercial return and the index of return on discounted investments can be used. At the same time, an investment project is considered sustainable if the value of GNI is sufficiently large (at least 25–30%), the value of the discount rate does not exceed the level for small and medium risks, and loans at real rates that exceed GNI are not expected, and the discounted yield index investment exceeds 1.2.

Subject to all the requirements for the parameters of the main scenario for the implementation of the project. Taking into account that the free financial resources of the enterprise include not only the accumulated balance of cash flow from all types of activities, but also the cash reserve as part of the assets of the enterprise, while it is recommended that the project be assessed as sustainable only if there is a certain financial reserve, the condition for project sustainability can be formulated as follows.

At each step of the calculation period, the sum of the accumulated balance of cash flow from all types of activities (cumulative effect) and financial reserves must be non-negative.

1.2.2 Calculation of break-even limits

The degree of stability of the project in relation to possible changes in the conditions of implementation can be characterized by indicators of the break-even boundaries and limit values of such project parameters as production volume, prices of manufactured products, etc. Such indicators are used only to assess the impact of a possible change in project parameters on its financial feasibility and efficiency , but they themselves do not refer to the performance indicators of the investment project, and their calculation does not replace the calculation of integral performance indicators.

The break-even limit of a project parameter for a certain step of the calculation period is defined as such a coefficient to the value of this parameter at a given step, when applied, the net profit received in the project at this step becomes zero. One of the most common indicators of this type is the break-even level. It is usually determined for the project as a whole, which corresponds to the formula below.

The break-even level at step m is the ratio of sales (production) corresponding to the “break-even point” () to the design () at this step. The "break-even point" refers to the volume of sales at which net profit becomes equal to zero. When determining this indicator, it is assumed that at step m:

the volume of production is equal to the volume of sales;

the amount of revenue changes in proportion to the volume of sales;

income from non-operating activities and expenses for this activity do not depend on sales volumes;

full current production costs can be divided into conditionally constant (not changing when the volume of production changes) and conditionally variable, changing in direct proportion to the volume of production;

the break-even level is calculated using the formula:

, (6)

The break-even point is determined by the formula:

, (7)

where - semi-fixed costs at step m, including depreciation, taxes and other deductions attributable to the cost and financial results that do not depend on the volume of production;
- income from non-sales activities minus expenses for this activity at this step;

unit price;

Conditionally variable costs per unit of production (services), including taxes and other deductions, attributable to the cost and financial results, proportional to revenue, except for income tax at the m-th step.

In practice, a formula is also used to determine the break-even level of the following type:

, (8)

where is the amount of revenue at the m-th step;

Total current production costs (production costs plus depreciation, taxes and other deductions attributable both to cost and financial results, except for income tax) at the m-th step;

The conditionally variable part of the total current production costs (including, along with the variable part of production costs and, possibly, depreciation, taxes and other deductions proportional to revenue) at the m-th step;

Income from non-operating activities minus expenses on this activity at the m-th step.

If the project provides for the production of several types of products, formula (8) does not change, and all the quantities included in it are taken for the entire project (without separation by type of product).

When using formulas (7), (8), all prices and costs should be taken into account without VAT.

Figure 1 shows a graphical way to determine the breakeven point.

Typically, a project is considered sustainable if, in the calculations for the project as a whole, the break-even level does not exceed 0.6-0.7 after the development of design capacities. The closeness of the break-even level to 1 (100%), as a rule, indicates the insufficient stability of the project to fluctuations in demand for products at this step. Even satisfactory break-even values at each step do not guarantee the effectiveness of the project (positive NTS). At the same time, high values of the break-even level at individual steps cannot be considered as a sign of the unfeasibility of the project (for example, at the stage of development of commissioned capacities or during the overhaul of expensive high-performance equipment, they can exceed 100%).

If the assumptions about the proportionality of or/and at step m to the volume of sales (production) at the same step are not met, instead of using formulas (7), (8), the break-even level should be determined by variant calculations (selection) of net profit at different production volumes.

Figure 1 Break even point chart

Along with the calculation of break-even levels, to assess the sustainability of the project, it is possible to evaluate the break-even boundaries for other project parameters - the maximum price levels for products and basic raw materials, the maximum share of sales without prepayment, etc. For such calculations, it is necessary to take into account the impact of changes in the corresponding parameter on various components of cash income and expenses. The closeness of the design values of the parameters to the break-even point may indicate insufficient stability of the project at the corresponding step.

Break-even boundaries can also be determined for each project participant (the criterion for reaching the boundary is the net profit of this participant turning to zero). To do this, it is necessary to determine how the income and expenses of this participant change when the values of the parameter for which the boundary values are determined change.

1.2.3 Method of parameter variation. Parameter limits

The output indicators of the project may change significantly in case of an unfavorable change (deviation from the design ones) of some parameters.

investment costs (or their individual components);

production volume;

production and marketing costs (or their individual components);

interest on a loan;

payment delays;

the duration of the settlement period (the moment the project is terminated);

other options.

In the absence of information about the possible, from the point of view of the project participant, the limits of change in the values of these parameters, it is recommended to carry out variant calculations of the feasibility and effectiveness of the project sequentially for the following scenarios:

) increase in investment. At the same time, the cost of work performed by Russian contractors and the cost of Russian-delivered equipment increase by 20%, the cost of work and equipment of foreign firms - by 10%. Accordingly, the cost of fixed assets and the amount of depreciation in the cost price change;

) increase by 20% of the design level of indirect production costs and by 30% of specific (per unit of output) direct material costs for the production and marketing of products. Accordingly, the cost of stocks of raw materials, materials, work in progress and finished products as part of working capital changes;

) reduction in revenue to 80% of its design value;

) increase by 100% the time of delays in payments for products supplied without prepayment;

) an increase in interest for a loan by 40% of its design value for loans in rubles and by 20% for loans in hard currency.

If the project provides for insurance against changes in the relevant parameters of the project, or the values of these parameters are fixed in the contracts prepared for conclusion, the scenarios corresponding to these cases are not considered.

The project is considered sustainable in relation to possible changes in parameters if, under all considered scenarios:

PTS is positive;

the necessary reserve of financial feasibility of the project is provided.

If, under any of the scenarios considered, at least one of the specified conditions is not met, it is recommended to conduct a more detailed analysis of the limits of possible fluctuations of the corresponding parameter and, if possible, clarify the upper limits of these fluctuations. If, even after such clarification, the conditions for project sustainability are not met, it is recommended:

in the absence of additional information, reject the project;

if information is available, evaluate the effectiveness of IP using more accurate methods described there.

Sustainability can also be assessed by defining limit values for project parameters, i.e. such their values at which the integral commercial effect of the participant becomes equal to zero. One of these indicators is GNI, which reflects the marginal value of the discount rate. To estimate the limiting values of parameters that change by calculation steps (prices of products and basic technological equipment, production volumes, volume of credit resources, rates of the most significant taxes, etc.), it is recommended to calculate the limiting integral levels of these parameters, i.e. such coefficients (constant for all calculation steps) to the values of these parameters, when applied, the NPV of the project (or participant) becomes zero.

1.2.4 Evaluation of the expected effect of the project, taking into account the quantitative characteristics of uncertainty

If more detailed information is available about the various project implementation scenarios, the probabilities of their implementation, and the values of the main technical and economic indicators of the project for each of the scenarios, a more accurate method can be used to assess the effectiveness of the project. It allows you to directly calculate the general indicator of the project's effectiveness - the expected integral effect (expected NPV). Estimation of the expected effectiveness of the project, taking into account the uncertainty, is carried out in the presence of more detailed information about the various scenarios for the implementation of the project, the probabilities of their implementation and the values of the main technical and economic indicators of the project for each of the scenarios. Such an assessment can be made both with and without taking into account the financing scheme of the project.

Calculations are made in the following order:

the whole set of possible scenarios for the project implementation is described (either in the form of an enumeration, or in the form of a system of restrictions on the values of the main technical, economic, and similar parameters of the project);

for each scenario, it is studied how the organizational and economic mechanism for the implementation of the project will operate under appropriate conditions, how the cash flows of the participants will change in this case;

for each scenario, for each step of the calculation period, inflows and outflows of real money and general performance indicators are determined (calculated or set by analytical expressions). According to scenarios that provide for "contingency" situations (accidents, natural disasters, sudden changes in market conditions, etc.), additional costs that arise in this case are taken into account. When determining the NPV for each scenario, the discount rate is assumed to be risk-free;

the financial feasibility of the project is checked. Violation of the feasibility conditions is considered as a necessary condition for the termination of the project (this takes into account the losses and income of the participants associated with the liquidation of the enterprise due to its financial insolvency);

initial information about uncertainty factors is presented in the form of probabilities of individual scenarios or intervals of change of these probabilities. Thus, a certain class of admissible (consistent with the available information) probabilistic distributions of project performance indicators is determined;

the risk of project unfeasibility is assessed - the total probability of scenarios in which the conditions for the financial feasibility of the project are violated;

the risk of project inefficiency is assessed - the total probability of scenarios in which the integral effect (ITS) becomes negative;

assesses the average damage from the implementation of the project in case of its inefficiency;

on the basis of indicators of individual scenarios, generalizing indicators of project effectiveness are determined, taking into account uncertainty factors - indicators of expected efficiency. The main such indicators used to compare different projects (project options) and choose the best of them are indicators of the expected integral effect (ETS) Eoj (for a separate section). The same indicators are used to substantiate the rational sizes and forms of reservation and insurance.

Methods for determining indicators of the expected effect depend on the available information about the uncertain conditions for the implementation of the project.

With probabilistic uncertainty, for each scenario, the probability of its implementation is considered to be known (given). A probabilistic description of the conditions for the implementation of the project is justified and applicable when the effectiveness of the project is primarily due to the uncertainty of natural and climatic conditions (weather, soil characteristics or mineral reserves, the possibility of earthquakes or floods, etc.) or the processes of operation and wear and tear of fixed assets (reduction in strength structures of buildings and structures, equipment failures, etc.). With a certain degree of conditionality, fluctuations in deflated prices for manufactured products and consumed resources can also be described in probabilistic terms.

In the case when there is a finite number of scenarios and their probabilities are given, the expected integral effect of the project is calculated by the mathematical expectation formula:

, (9)

where is the expected integral effect of the project;

Integral effect (ITS) under the k-th scenario;

Probability of this scenario.

At the same time, the risk of project inefficiency (Re) and the average damage from the project implementation in case of its inefficiency (Ue) are determined by the formulas:

, (11)

where the summation is carried out only over those scenarios ( k), for which the integral effects (ITS) are negative.

The integral effects of the scenarios and the expected effect depend on the value of the discount rate (). The premium () for the risk of non-receipt of income provided for by the main scenario of the project is determined from the condition of equality between the expected effect of the project (E), calculated at the risk-free discount rate , and the effect of the main scenario, calculated at the discount rate , including the risk adjustment:

, (12)

In this case, the average losses from not receiving the income provided for by the main scenario under unfavorable scenarios are covered by the average gain from obtaining higher incomes under favorable scenarios.

Example 7.1. The process of the object functioning is considered as discrete and starts from step (year) 1. The service life of the object is unlimited. At each m-th step, the object provides a non-random (annual) effect Фm. At the same time, the project is terminated at some step if a “disaster” occurs at that step (a natural disaster, a serious equipment failure, or a cheaper replacement product on the market). The probability that a catastrophe will occur at some step, provided that it was not at the previous steps, does not depend on the step number and is equal to p.

The expected integral effect is defined here as follows. First of all, note that the probability that there will be no "catastrophe" at step 1 is equal to 1-p. The probability that it will not happen either at the first or at the second step, according to the rule of product of probabilities is ( 1-p)2 etc. Therefore, either no “catastrophe” will occur until the end of step m and the effect of the project at this step will be equal to Фm, or such an event will occur and then this effect will be equal to zero. This means that the mathematical expectation (average value) of the effect at this step will be equal to Фmх(1-p)m. Summing up these values, taking into account the time difference, we find the mathematical expectation of the NPV of the project:

, (13)

It can be seen from the obtained formula that the multi-temporal effects provided “under normal conditions” (i.e., in the absence of catastrophes) are reduced to the base moment of time using the coefficients (1-p)m/(1+E)m, which do not coincide with "usual" discount coefficients 1/(1+E)m. In order for the “usual” discounting without taking into account risk factors and the calculation taking into account these factors give the same result, it is necessary that a different value of Ep be taken as the discount rate, such that 1+Ep=(1+E)/ (1-p). Hence we get that Ep=(E+p)/(1-p). For small values of p, this formula takes the form Ep=E+p, confirming that in this situation, risk accounting is reduced to calculating the NPV "under normal conditions", but with a discount rate exceeding the risk-free value by the "risk premium", reflecting in this case, the (conditional) probability of terminating the project during the relevant year.

In the case when there is no information about the probabilities of the scenarios (it is only known that they are positive and total 1), the expected integral effect is calculated using the formula:

where and - the largest and smallest integral effect (NTS) under the considered scenarios; - a special standard for taking into account the uncertainty of the effect, reflecting the system of preferences of the corresponding economic entity in conditions of uncertainty.

In the general case, in the presence of additional restrictions on the probabilities of individual scenarios ( pm), it is recommended to calculate the expected integral effect using the formula:

where is the integral effect (ITS) for the k-th scenario, and the maximum and minimum are calculated for all admissible (consistent with the available information) combinations of the probabilities of individual scenarios.

1.3 Profitability of the investment project. Determining the profitability of an investment project

The profitability of an investment project is, in fact, one of the main criteria for evaluating such projects.

One of the main criteria for assessing the effectiveness of an investment project can be called the reality of the implementation of this project. That is, how realistic it is to implement the planned activities, the purpose of which is to increase the value of the company (fixed assets) and reduce various risks and costs. Here, first of all, it is important to evaluate the source data and choose the appropriate methods for calculating and analyzing the source data. That is, the correct and reasonable choice of tools for analyzing the financial and economic component of the project.

In the case of the economic component of the effectiveness of an investment project, it is primarily about how much real growth will be given by the goal for which it is planned to spend money. The main point here is the ability to realize the result of the investment and have a relatively long period to maintain the value of this result.

One of the simple methods for evaluating the profitability and effectiveness of an investment project is the calculation of a simple rate of return, when the annual net profit is divided by the total investment. One of the meanings of such an assessment is the determination of the approximate payback period for an investment project. You can also mention such an indicator as the payback period of the project, it is calculated by dividing the amount of the initial investment by the total annual income from the investments made. This indicator is designed to show how soon the money invested in the project will be returned and the profit from the already implemented project will begin to flow.

There are also a number of complex methods for assessing the profitability of an investment project, these are indicators such as the project's payback indicator, the internal rate of return, and so on. As a rule, depending on the situation, certain methods and their modifications are used. Often, simple methods are used for a quick assessment, while complex methods are used for a more detailed and comprehensive assessment, the meaning of which is acquired with long-term investments.

As for the financial component, the financial viability of the investment object is primarily important here. In the sense that the investor must understand the nature of the funds (cash flows) at the expense of which the enterprise exists. He needs this first of all in order to draw the right conclusion and correctly calculate and evaluate the possibilities of production for the implementation of an investment project in these conditions. Simply put, what income and expenditure items exist so that it does not turn out that the money allocated for the development of production would be spent on its maintenance and operation. For example, the repayment of loans and other obligations, hidden and unaccounted for circumstances that Russian enterprises often hide in order not to scare away and lure the investor with deceptive well-being. And then, having received money from the investor, direct it to non-target needs and “unforeseen expenses”.

The company should be self-sufficient and without investments, and the investments themselves should be directed only to additional capitalization and deriving benefits from this, without taking into account the funds necessary for the further functioning of the enterprise and the funds and goals planned before the moment of investment. This is the main task, the solution of which determines the profitability of the investment project.

2. Calculation of the efficiency of the organization of transportation on new routes of ATP

The investment project is based on investments for the purchase of vehicles for the transportation of various types of cargo. 4 types of vehicles were selected for purchase:

Dump truck KAMAZ-65115-046/-050 (6x4) with rear unloading, oval-type platform;

- SZAP-35172 car on KAMAZ-65115-1032-62 chassis with SZAP-8582 trailer;

- A road train consisting of a KAMAZ-65116 (6x4) tractor and a SZAP-93271-01/30 semi-trailer;

KAMAZ-43253 (4x2).

The term of the investment project is 3 years. At the end of the term, it is planned to sell the vehicles at the residual value. Depreciation is calculated using the straight-line method

Table 1 shows the initial data.

Table 1 Initial data for calculating investment project performance indicators

	KAMAZ-65115-046/-050 (6x4)	SZAP-35172 on KAMAZ-65115-1032-62 chassis with trailer SZAP-8582	KAMAZ-43253 (4x2)
Number of vehicles, pcs
The cost of one vehicle, rub.
The cost of all vehicles of the same brand, rub.
Depreciation rate
Depreciation deductions for 3 years, rub.
Residual value of one vehicle, rub.

Thus, investment investments amount to 19808120 rubles.

The residual value of all vehicles is 8472302 rubles.

Quarterly uniform receipts of funds amount to 13899576.3 rubles. Expenses in summer and winter are 9,615,832.4 and 7,107,354.2 rubles, respectively.

Calculate net income and net present value. The discount rate is 26%. It consists of three elements:

interest on deposits (13.5%);

risk percentage (5%);

inflation rate (12%).

Table 2 shows the calculations of net and net present value.

Table 2 Calculation of NH and NPV at a discount rate of 26%

Period (quarter)	cash flows	Amount of cash flows, rub.	Cast index
	Capital investments

BH=55119978 rubles;

NPV=493780 rubles.

The net present value is positive, which is an important criterion for the attractiveness of an investment project. But by itself it is low. Accordingly, the profitability of the project is low.

The profitability index is equal to:

PI=19808120/19793562=1

The profitability index is equal to 1, which indicates that the income fully covers the costs of implementing the investment project.

The payback period is 3 years, since the period of use of the project is 3 years, and the ratio of capital investments to the amount of quarterly present income is 1.

To calculate the break-even point, we take the discount rate equal to 40%.

Table 3 Calculation of net present value at a discount rate of 40%

Period (quarter)	cash flows	Amount of cash flows, rub.	Cast index	Present amount of cash flows, rub.
	Capital investments













	Income from the sale of an investment project

NPV = -6395023 rubles.

We calculate the internal rate of return, which will be the break-even point.

The internal rate of return is 27%.

The sensitivity analysis of the investment project is carried out on the basis of changes in such indicators as the volume of transportation and the price of fuel.

Fuel costs account for 56% of the total cost of transporting goods. Assume that the price of fuel is increased by 2%.

NPV \u003d -19808120 + 49899478.9 + 508338.12-30105917.02 * (1-0.56 + 0.56 * 1.02) \u003d 156593.7

With an increase in fuel prices by 2%, the net present value will decrease by 68%, which will amount to 156,593.7 rubles. If prices increase by 3%, the net present value will be negative.

With a decrease in traffic volume by 0.5%, the net discounted income will decrease by 50.5% and amount to 244,282.6 rubles.

It is possible to reduce the volume of traffic as much as possible by only 0.989% and at the same time maintain a positive value of the net present value. In this case, the NPV will be equal to 274 rubles. With a larger percentage of the decline in traffic volumes, the NPV is negative.

This investment project is weakly stable and not profitable. This can be seen from the calculations of net present value. The project is very sensitive to changes in key factors such as traffic volume and fuel prices.

The low profitability of the project is due to the fact that the project is used in the first three years. From the calculations it can be seen that the payback period is also equal to three years. During this period, incoming cash flows are only enough to cover expenses. The profit is very small. And after three years, the project will be even less efficient and profitable, as the vehicles will be worn out and more maintenance costs will be required.

CONCLUSION

In this course work, the performance indicators of the investment project were considered. Formulas for the payback period of the project, methods for calculating its economic stability, as well as profitability are given.

On the example of the investment project "Organization of transportation along new routes of ATP", the following indicators were calculated:

net income;

net discounted income;

profitability index;

internal rate of return;

payback period.

A sensitivity analysis of the investment project was also carried out.

Thus, net income amounted to 55119978 rubles. The net discounted income is equal to 493,780 rubles. The profitability index is 1. The payback period is three years. The internal rate of return of the investment project is 27%. Based on the calculations, we can conclude that this investment project is weakly stable and not very profitable.

LIST OF USED SOURCES

1 Vilensky, P.L. Evaluation of the effectiveness of investment projects: Theory and practice; Textbook / P.L. Vilensky, V.N. Livshits, S.A. Smolyak - M.: Delo, 2012. - 888s.;

Gracheva, M.V. Risk - analysis of the investment project: Proc. for universities / M.V. Grachev. - M.: UNITI - DANA, 2013. - 351 p.;

Margolin, A.M. Economic evaluation of investments: Textbook / A.M. Margolin, A.Ya. Bystryakov. - M.: EKMOS, 2010. - 240s.;

Gidulyanov, V.I. Analysis of methods for assessing the effectiveness of capital investments / V.I. Gidulyanov, A.B. Khlopotov, - M .: MGGU Publishing House, 2001. - 78s.;

Pavlova, L.P. Financial management. Management of the cash flow of the enterprise: Proc. for universities / L.P. Pavlova. - M.: Banks and exchanges: UNITI, 1995. - 400s.

The sustainability of the project is its ability to maintain its effectiveness under various changes in the implementation conditions.

The project is considered absolutely sustainable if, under all alternative scenarios of its development, it turns out to be effective and financially viable, and the possible negative consequences of adverse events can be eliminated using the organizational and economic measures provided for in the project (diversification, risk distribution among participants, insurance, reservations and etc.). A project is unsustainable if it has proved to be ineffective or results in significant financial losses under scenarios that have a sufficiently high level of probability of occurrence.

An enlarged assessment of project sustainability under risk conditions is a method of express analysis aimed at quickly obtaining an opinion on the riskiness of a project without the use of complex statistical and mathematical risk assessment procedures.

When using an aggregated assessment of project sustainability as the main method for taking into account risk and uncertainty, it is recommended:

Use moderately pessimistic forecasts of the technical and economic parameters of the project, prices, tax rates, exchange rates and other parameters of the economic environment of the project, production volumes and prices for products, deadlines and costs of certain types of work, etc.

Provide reserves of funds to cover the possible growth of investment and operating costs due to the adjustment of design decisions in the process of its implementation

Use the risk-adjusted discount rate in performance criteria evaluations

At the same time, if there is no information about possible changes in the values of individual parameters in the future, it is recommended to evaluate the effectiveness of the project for the following scenarios:

An increase in investment costs, as well as a corresponding adjustment in the amount of depreciation in the cost price in the following areas: the cost of work performed by domestic contractors and the cost of equipment. Anna of domestic supply - by 20%, the cost of work and equipment of foreign firms - by 10%

Increase by 20% of the design level of indirect production costs and by 30% of specific (per unit of production) direct material costs, respectively, the cost of stocks of raw materials, materials, unfinished production and finished products as part of working capital changes

Reducing the amount of revenue to 80% of its design value;

2-fold increase in the design time for delays in payments for goods supplied without prepayment;

Increase in the interest for a loan by 1.4 times for loans in hryvnia and by 1.2 times for loans in foreign currency

If the project provides for insurance in case of changes in the relevant project parameters, or the values of these parameters are fixed in the concluded agreements as part of the project documentation, the possibility of deterioration of these parameters is not considered.

For an aggregated assessment of the sustainability of the project, indicators of the internal rate of return and the index of profitability of discounted investments can be used. The project is considered sustainable if. All of the following conditions apply:

The IRR value is quite large - at least 25-30%;

The value of the discount rate does not exceed the level acceptable for small and medium risks - 15%;

Interest rates on loans and other components of borrowed capital in project financing do not exceed IRR;

Discounted Investment Return Index (PI) exceeds 1.2

In addition, the project is recommended to be assessed as sustainable only if there is a certain financial reserve - all free financial resources of the enterprise, including the total accumulated cash flow balance for the project and cash balances in the assets of the enterprise from other activities (related to this project). At the same time, it is desirable that the volume of such a financial reserve for each step of the billing period is at least 5% of the net operating and investment costs of the corresponding period.

Compliance with this requirement may require a revision of the project financing scheme with subsequent adjustment of the entire cash flow forecast and estimates of performance indicators, namely:

Changing the size and terms of attracting loans;

Creation of the necessary reserves, cash reserves, deductions to the additional fund;

Adjustment of the terms of settlements between project participants;

Insurance of project participants against certain risks

At the same time, additional costs associated with the occurrence of risk, including compensation for losses, should be reflected as a separate item of cash outflows "Expected losses" Their volume by steps. The settlement period is defined as the product of possible financial losses and the probability of their occurrence at a given step anomaly.

In cases where, even after the revision of the financial plan, the project remains unstable according to the results of the integrated assessment, its implementation is inappropriate

When using this method, in order to ensure the sustainability of the project, it is recommended:

use moderately pessimistic forecasts of the technical and economic parameters of the project, prices, tax rates, exchange rates and other parameters of the economic environment of the project, production volume and product prices, deadlines and costs of certain types of work, etc. (at the same time, positive deviations of these parameters will be more likely than negative ones);
provide for reserves of funds for unforeseen investment and operating expenses due to possible errors of the design organization, revision of design decisions during construction, unforeseen delays in payments for delivered products, etc.;
increase the discount rate in the calculations of commercial efficiency by the amount risk adjustments .

Subject to these conditions, the project is recommended to be considered as sustainable in general, if it has sufficiently high values of integral indicators, in particular, a positive value of the expected net present value.

8.3. An aggregated assessment of the sustainability of the project from the point of view of its participants

The stability of the IP from the point of view of the enterprise - a participant in the project with possible changes in the conditions for its implementation - can be generally verified based on the results of calculations of commercial efficiency for the main (basic) scenario of the project implementation by analyzing the dynamics of real money flows. In this case, real money flows included in the calculation are calculated for all types of activity of the participant, taking into account the conditions for granting and repaying loans.

If an accident is possible at one or another step of the billing period, the liquidation of the consequences of which, including compensation for damage, requires additional costs, the cash outflows include the corresponding expected losses . They are defined as the product of the costs of eliminating the consequences of an accident by the probability of an accident occurring at a given step.

For an aggregated assessment of the sustainability of the project, indicators of the internal rate of commercial return and the index of return on discounted investments can be used. At the same time, IP is considered sustainable if the value of GNI is large enough (at least 25–30%), the value of the discount rate does not exceed the level for small and medium risks, and loans at real rates that exceed GNI are not expected, and the index of return on discounted investments exceeds 1.2.

Subject to the requirements of Sec. 8.2 to the parameters of the main scenario for the implementation of the project, the project is recommended to be assessed as sustainable only if there is a certain financial reserve. Considering that the free financial resources of the enterprise include not only the accumulated balance of cash flow from all types of activities, but also the reserve of funds as part of the assets of the enterprise, the condition for the sustainability of the project can be formulated as follows.

At each step of the calculation period, the sum of the accumulated balance of cash flow from all types of activities (cumulative effect) and financial reserves must be non-negative.

8.4. Calculation of break-even limits

The degree of stability of the project in relation to possible changes in the implementation conditions can be characterized by indicators break-even limits andlimit values project parameters such as production volume, prices of manufactured products, etc. Such indicators are used only to assess the impact of a possible change in project parameters on its financial feasibility and efficiency, but they themselves do not relate to IP performance indicators, and their calculation does not replace the calculation of integral indicators efficiency.

The limiting values of the project parameters are discussed in Sec. 8.5.

The break-even limit of a project parameter for a certain step of the calculation period is defined as such a coefficient to the value of this parameter at a given step, when applied, the net profit received in the project at this step becomes zero. One of the most common indicators of this type is break-even level. It is usually determined for the project as a whole, which corresponds to the formula (8.1) below.

UX breakeven m at step m is the ratio of the volume of sales (production) corresponding to the “break-even point” (Vcr m) (see subsection 2.3.1) to the projected volume (V m) at this step. The "break-even point" refers to the volume of sales at which net profit becomes equal to zero. When determining this indicator, it is assumed that at step m:

the volume of production is equal to the volume of sales;
the amount of revenue changes in proportion to the volume of sales;
income from non-operating activities and expenses for this activity do not depend on sales volumes;
full current production costs can be divided into conditionally constant (not changing when the volume of production changes) and conditionally variable, changing in direct proportion to the volume of production;
the break-even level is calculated using the formula

. (8.1)

The break-even point Vcr m is determined by the formula

(8.2)
where CF m are conditionally fixed costs at step m, including depreciation, taxes and other deductions attributable to cost and financial results that do not depend on the volume of production;

DC m - income from non-operating activities minus expenses for this activity at this step;

P is the price of a unit of production;

CV1 m - conditionally variable costs per unit of production (services), including taxes and other deductions, attributable to the cost and financial results, proportional to revenue, except for income tax at the m-th step.

In practice, a formula is also used to determine the break-even level of the following type:

(8.3)
where Sm is the amount of revenue at the m-th step;

Cm - full current production costs (production costs plus depreciation, taxes and other deductions attributable both to cost and to financial results, except for income tax) at the m-th step;

CVm is a conditionally variable part of the total current production costs (including, along with the variable part of production costs and, possibly, depreciation, taxes and other deductions proportional to revenue) at the m-th step;

DCm - income from non-operating activities minus expenses on this activity at the m-th step.

If the project provides for the production of several types of products, formula (8.3) does not change, and all the quantities included in it are taken over the entire project (without separation by type of product).

When using formulas (8.2), (8.3), all prices and costs should be taken into account without VAT.

On fig. 8.1 shows a graphical way to determine the break-even point.

Fig.8.1. breakeven point chart
Typically, a project is considered sustainable if, in the calculations for the project as a whole, the break-even level does not exceed 0.60.7 after the development of design capacities. The closeness of the break-even level to 1 (100%), as a rule, indicates the insufficient stability of the project to fluctuations in demand for products at this step. Even satisfactory break-even values at each step do not guarantee the effectiveness of the project (positive NTS). At the same time, high values of the break-even level at individual steps cannot be considered as a sign of the unfeasibility of the project (for example, at the stage of development of commissioned capacities or during the overhaul of expensive high-performance equipment, they can exceed 100%).

If the assumptions about the proportionality of Sm or/and CVm at step m to the volume of sales (production) at the same step are not met, instead of using formulas (8.2), (8.3), the break-even level should be determined by variant calculations (selection) of net profit at different production volumes.

Break-even limits can also be determined for each project participant (the criterion for reaching the limit is the net profit of this participant turning to zero). To do this, it is necessary to determine how the income and expenses of this participant change when the values of the parameter for which the boundary values are determined change.

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EG Nepomnyashchy Economic evaluation of investments. Coursework: Accounting for uncertainty and risk in evaluating the effectiveness of investment projects An integrated assessment of the sustainability of an investment project as a whole

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- A road train consisting of a KAMAZ-65116 (6x4) tractor and a SZAP-93271-01/30 semi-trailer;

KAMAZ-43253 (4x2).

8.3. An aggregated assessment of the sustainability of the project from the point of view of its participants

8.4. Calculation of break-even limits

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