Topic №11: Evaluation of financial and economic efficiency of investment projects

Topic № 11: Evaluation of financial and economic efficiency of investment projects

• 1. The nature and importance of the evaluation of investment projects
• 2. Simple (traditional) methods of evaluation of investment projects
• 3.The processes of compounding and discounting
• 4. Methods of assessing the effectiveness of investments based on discounted cash flows. 

The Investment project - a complex action on realization of the capital investments in order to obtain certain benefits in the future.

• The Investment project - a complex action on realization of the capital investments in order to obtain certain benefits in the future.
• The Investment project - a project, where all actions are described with the position in which financial, material and non-material sources are invested to the object and get expected results.

• Investment project first of all, must aimed at achieving development such kind of priority spheres of economy as oil and chemistry industries, transport and communication, power engineering, mining and processing sectors, construction, agrarian sectors and tourism.

Implementation of investment projects contribute to improve of production processes in the country, they are required to improve the quality of domestic products and to increase exports, etc.;

• Implementation of investment projects contribute to improve of production processes in the country, they are required to improve the quality of domestic products and to increase exports, etc.;
• Investment projects provide the basis for: accelerating scientific and technological progress, updating equipment and technology for the production of competitive products;
• Implementation of investment projects helps to create new jobs and to solve the problems of employment of the population and so on.

In general understanding, “efficiency” (performance) is called the degree of achievement the best results with the least costs.

• In general understanding, “efficiency” (performance) is called the degree of achievement the best results with the least costs.
• The meaning of “effectiveness of the investment project “ is reflecting the compliance of the investment project to the objectives and interests of the participants. For different members of the project, the efficiency can be just different. Financially realizable project can be at the same time ineffective for its participants.