scholarly journals Is It Correct to Use the Internal Rate of Return to Evaluate the Sustainability of Investment Decisions in Public Private Partnership Projects?

2018 ◽  
Vol 10 (12) ◽  
pp. 4371 ◽  
Author(s):  
Vicente De Albornoz ◽  
Antonio Galera ◽  
Juan Millán
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Point Of View ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Economic Point ◽  
Investment Projects ◽  
Internal Rate ◽  
Investment Criterion

Public Private Partnerships (PPP) are viewed by the private sector as investment projects. An investment criterion, such as the internal rate of return (IRR), widely used by practitioners, is thus necessary in order to determine if the opportunity is sustainable from an economic point of view and worth pursuing. However, a cash flow may have multiple IRRs—is it appropriate in the context of PPPs to use this criterion? This paper provides a clear proposition to determine the potential number of real positive IRRs a cash flow may have, depending on the number of sign variations and the value of the net present value (NPV) calculated with a discount rate equal to 0 (NPV(r = 0)). This proposition can sometimes be used when other tests (such as Norstrom’s Criterion) are inconclusive to determine if a cash flow has a single real positive IRR. The proposition is generally met by the typical cash flow of a PPP project, validating the use of IRR as an investment criterion.

scholarly journals Methodical approaches to the assessment of investment attractiveness of agricultural enterprises

2019 ◽  
Vol 21 (93) ◽  
pp. 63-69
Author(s):  
R. M. Myniv
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Cash Flows ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Agricultural Enterprises ◽  
Internal Rate ◽  
Dynamic Methods

Evaluation of investment efficiency is central to the process of justifying and selecting possible options for investing in investment projects, and is therefore a key to successful implementation of investment activities of agricultural enterprises. The main directions of financing of investment projects of agricultural enterprises are: purchase or construction of unfinished construction objects, new construction, expansion of existing enterprises, reconstruction of existing enterprises and technical re-equipment of existing enterprises. Two main groups of methods of assessing the cost-effectiveness of investment projects have become most widespread: static and dynamic. Static methods involve the calculation of indicators based on undiscounted cash flows. Dynamic methods, on the contrary, take into account the change in the value of money over time and imply bringing the values of all cash flows to the same period by discounting or compounding. Dynamic methods for assessing the effectiveness of investment projects include the following basic methods that rely on most modern Ukrainian enterprises, such as net present value cash flow (NPV), internal rate of return (IRR), payback period (DPP) and project profitability index (PI). On their basis the basic methods of selection of investment projects of agricultural enterprises are formed. Net Present Value (NPV) calculation. is based on comparing what will be invested in the future with what is invested now. The Profitabale Index (PI) is directly related to net present value and is defined as the ratio of the discounted cash flow to initial investment. The IRR (Internal Rate of Return) is the discount rate at which the projected cash inflows are equal to the project's discounted cash flows. As indicators of the effect in calculating the overall efficiency of investments, it is advisable to use changes in the following values of growth: revenue from the sale of enterprise products; gross income; profit before tax; net profit; cash flow; clean products. Gross and net investment should be included in the costs. The use of qualitative methods in investment analysis is due to the following reasons: the subjectivity of the phenomena or characteristics studied; lack or lack of necessary information; inability to analyze objective and acceptable methods; lack of research object (to be created during project implementation). Quantitative methods for evaluating agricultural investment projects include methods of probability theory and mathematical statistics, as well as economic and statistical methods.

TINJAUAN STUDI KELAYAKAN USAHA BADAN USAHA MILIK DESA (NAGARI) KAMANG HILIA SEJAHTERA KENAGARIAN KAMANG HILIA, KECAMATAN KAMANG MAGEK, KABUPATEN AGAM, PROVINSI SUMATERA BARAT

2018 ◽  
Vol 3 (2) ◽  
pp. 160
Author(s):  
Halkadri Fitra ◽  
Salma Taqwa ◽  
Charoline Cheisviyanny ◽  
Abel Tasman ◽  
Nurzi Sebrina
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Average Rate ◽  
Flow Analysis ◽  
Payback Period ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Penelitian ini bertujuan untuk melihat kelayakan aspek keuangan usaha grosir sembako Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera di Kenagarian Kamang Hilia Kecamatan Kamang Magek Kabupaten Agam Provinsi Sumatera Barat yang dilakukan pada tahun 2018. Penelitian bersifat deskriptif kuantitatif dengan menggunakan metode cash flow analysis, payback period, net present value, profitability index, internal rate of return, dan average rate of return. Hasil penelitian menunjukkan bahwa nilai net cash flow Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera adalah positif yaitu Rp.21.774.000, nilai payback period adalah 1,15 tahun, nilai net present value positif sebesar Rp.10.680.034,47, nilai profitability index adalah positif 1,37, sedangkan nilai internal rate of return adalah 46,7% dan nilai average rate of return adalah 57,23%. Berdasarkan standar penilaian maka semua metode yang digunakan memberikan kesimpulan bahwa usaha grosir sembako milik Badan Usaha Milik Desa (Nagari) Kamang Hilia Sejahtera dalam kategori layak untuk dilaksanakan.

scholarly journals Evaluation of Investment Projects: A Case from Turkish Cement Sector

2016 ◽  
Author(s):  
Miyase Karabulut ◽  
Sıtkı Sönmezer ◽  
Vedat Zeki Yenen ◽  
Zeynep Emir
Keyword(s):  
Qualitative Research ◽  
Net Present Value ◽  
Capital Budgeting ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Preliminary Results ◽  
Internal Rate ◽  
Exclusive Or

Capital budgeting is crucial for firms that have projects to evaluate especially when the projects are mutually exclusive or financing is scarce. The aim of the study is to determining the most widely used methodologies in capital budgeting decisions and their effectiveness. A qualitative research will provide cement sector specific examples in assessing industry projects and compares the methods of Net Present Value, İnternal rate of Return, Pay-back period, discounted pay-back period and MIRR. Each method is briefly discussed and its drawbacks and advantages are mentioned in detail. Other sectors are also examined in terms of capital budgeting. Our preliminary results indicate that net present value method dominates capital budgeting decisions in the sectors under study.

STUDI INVESTASI PENGEMBANGAN PERUMAHAN DI MALANG

2017 ◽  
Vol 11 (1) ◽  
pp. 32
Author(s):  
Fadjar Purnomo
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Rate Of Return ◽  
Cost Ratio ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Benefit Cost Ratio ◽  
Internal Rate ◽  
Benefit Cost

Semakin meningkatnya penduduk Kota Malang merupakan peluang besar bagi developer untuk mengembangkan usahanya di bidang perumahan. Namun sebelum menanamkan modalnya untuk berinvestasi apalagi dalam jumlah besar seharusnya developer melakukan studi kelayakan apakah investasi tersebut menguntungkan atau tidak. Penelitian ini bertujuan untuk mengetahui kelayakan finansial dalam investasi pengembangan perumahan, serta mengetahui tingkat sensitivitas perubahan suku bunga dan biaya langsung.Data penelitian yang digunakan berupa data sekunder yaitu gambar perencanaan, harga satuan pekerjaan dari developer, biaya pajak, biaya perijinan, UKL/UPL/AMDAL, biaya pengukuran tanah, biaya operasional, biaya promosi, periode investasi, dan lain-lain. Pengolahan data secara deskriptif untuk menentukan cash flow proyek. Berdasarkan cash flow yang didapat selanjutnya dilakukan analisis kelayakan finansial menggunakan parameter PP, NPV, IRR, dan BCR. Dan selanjutnya dilakukan analisis sensitivitas tingkat kelayakan terhadap perubahan suku bunga dan biaya pengeluaran.Hasil penelitian menunjukkan bahwa investasi pengembangan suatu perumahan di Malang pada suku bunga 12,79% layak secara finansial karena nilai  parameter pay back periode (PP) terjadi pada tahun ke-7, nilai net present value (NPV) sebesar Rp 34.130.813.565-, nilai benefit cost ratio (BCR) sebesar Rp 1,14, nilai internal rate of return (IRR) sebesar 16,67%. Perubahan suku bunga dan perubahan biaya pengeluaran cukup sensitive terhadap kelayakan finansial dalan investasi ini. Kata-kata kunci: finansial, investasi, kelayakan, pengembanganperumahan

scholarly journals EVALUATION OF INVESTMENT PROJECTS IN CASE OF CONFLICT BETWEEN THE INTERNAL RATE OF RETURN AND THE NET PRESENT VALUE METHODS

Ekonomika ◽  
2010 ◽  
Vol 89 (4) ◽  
pp. 116-130 ◽  
Author(s):  
Jonas Mackevičius ◽  
Vladislav Tomaševič
Keyword(s):  
Net Present Value ◽  
Investment Project ◽  
Expected Profit ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate

Results obtained by employing the net present value (NPV) and the internal rate of return (IRR) methods allow to objectively determine the effectiveness and attractiveness of an investment project and to compare investment projects differing in scope, length or the amount of expected profit. While results obtained by the NPV and IRR methods normally correlate, contradictions are possible in individual cases. Such contradictions are called ‘conflict between the IRR and NPV methods’. The paper deals with the main characteristics of NPV and IRR, analysing the substance of the conflict and cases of its manifestation. A technique for the resolution of the NPV and IRR conflict is proposed.

scholarly journals Analisa Kelayakan yang Mempertimbangkan Ketidakpastian pada Penambahan Gudang PT Media Belanja Teknologi

2021 ◽  
Vol 5 (2) ◽  
pp. 273
Author(s):  
Muchamad Hengki Riawan Putra
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Payback Period ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Keputusan investasi merupakan suatu alternatif kebijakan yang dilakukan perusahaan dalam mengembangkan usahanya agar mendapatkan keuntungan yang diharapkan. Penambahan gudang baru yang dilakukan oleh PT. Media Belanja Teknologi untuk menaikkan omset penjualan dan pemenuhan ketersediaan stock. Penelitian ini untuk mengkaji keputusan rencana investasi dapat diterima atau tolak akibat ketidakpastian penjualan yang disebabkan oleh Covid 19. Untuk mengambarkan ketidakpastian atas penjualan tersebut, peneliti mengkategorikan menjadi 3 kondisi penjualan yaitu kondisi sepi, normal dan ramai. Data yang digunakan adalah data perusahaan dan data pendukung lainnya. Data yang digunakan dalam analisa adalah laporan keuangan perusahaan.  Sedangkan data pendukung adalah perencanaan investasi, data perkiraan cash flow pada periode yang akan datang. Beberapa metode perencanaan investasi adalah discounted payback period, net present value, internal rate of return, dan profitability indeks. Hasil analisis yang dilakukan terhadap ketiga kondisi tersebut menghasilkan discounted payback period kurang dari 5 tahun, NPV yang dihasilkan bernilai positif, dan PI juga menunjukkan hasil lebih besar dari 1 (satu). Sesuai kriteria penerimaan investasi, maka hasil analisis yang ada dapat dijelaskan bahwa rencana investasi PT. Media Belanja Teknologi dapat diterima untuk dilakukan. Kata kunci: Investasi, Discounted Payback Period, NPV, PI

scholarly journals Kajian Bisnis Plan PT CAP Tentang Hunian Rumah Di Kelurahan Semanan Jakarta Barat Tahun 2020-2024

2021 ◽  
Vol 11 (2) ◽  
pp. 109-124
Author(s):  
Dede Hermawan ◽  
Tina Rosa ◽  
Tri Suratmi
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Payback Period ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Penelitian ini merupakan penelitian operasional (OR) prediktif studi, dimaksudkan untuk membuat perhitungan tentang kelayakan rencana bisnis dengan mempertimbangkan berbagai faktor. Pendekatan yang digunakan adalah kualitatif, untuk mengkaji rencana bisnis yang dibuat oleh PT CAP dalam melakukan ekspansi bisnis di bidang propresi di wilayah Jakarta Barat.Dari hasil penelitian yang telah penulis lakukan, didapatkan payback period didapatkan alternatif normal normal 36 bulan, alternatif optimis 24 bulan. Hasil ini jauh lebih kecil dari ketentuan manajemen 4 tahun, sehingga proyek ini layak untuk diterima. Analisis Net Present Value, dari hasil perhitungan NPV cash flow masih jauh lebih besar dari NPV cash outflow, artinya dari penilaian NPV proyek ini dinilai sangat layak untuk dilaksanakan. Internal Rate of Return (IRR) proyek ini layak karena jika mencari IRR, alternatif normal dan optimis lebih besar daripada biaya modal rata-rata tertimbang (WACC). Berdasarkan hasil analisis dan perhitungan yang telah dilakukan penulis sehubungan dengan proyek kawasan perumahan Citra Garden Puri Semanan di Semanan, Jakarta Barat, secara umum investasi tersebut dinilai layak dan menguntungkan tidak hanya bagi pengembang tetapi juga bagi konsumen yang membeli rumah di proyek tersebut. . Memperhatikan apa yang telah dianalisis dan dibahas, maka saran penulis adalah mengecek kembali arus kas dengan mempertimbangkan mencari alternatif pendanaan dengan pinjaman yang meningkat sehingga biaya modalnya kecil. Kata Kunci : Payback Period, NPV, IRR

scholarly journals The Extent of Using Capital Budgeting Techniques in Evaluating Manager’s Investments Projects Decisions (A Case Study on Jordanian Industrial Companies)

2017 ◽  
Vol 9 (12) ◽  
pp. 175
Author(s):  
Osama Samih Shaban ◽  
Ziad Al-Zubi ◽  
Ahmad Adel Abdallah
Keyword(s):  
Net Present Value ◽  
Research Study ◽  
Capital Budgeting ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate ◽  
Industrial Companies ◽  
Accounting Rate

The aim of this research paper is to study the extent of using capital budgeting techniques on choosing the suitable project for investment. The current research study focused on capital budgeting techniques such as Net Present Value NPV, and Internal Rate of Return IRR, and Pay Back period PB, which is considered the main tools in the hands of decision makers in deciding the best possible alternative of investment. In order to achieve the purposes of the study a questionnaire have been created (based on Graham and Harvey survey in 2001), the aim was to cover most of the Jordanian industrial companies despite of their size and ownership in the current year 2017. Resolution data were analyzed using the statistical program SSPS. Finally, the study concluded that, 58% of Jordanian industrial companies use the Net Present Value, 22% use the Payback Period, 12% use the Internal Rate of Return, and the remaining used a combination of the Accounting Rate of Return, Profitability Index, and sensitivity analysis. The current research study is expected to assess management in choosing the best capital budgeting technique in the evaluation of its future investment projects.

scholarly journals Comparative analysis of the most important economic criteria for the company’s investment projects

2021 ◽  
pp. 125-141
Author(s):  
Vladymyr Iankovyi
Keyword(s):  
Comparative Analysis ◽  
Net Present Value ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate ◽  
Future Production ◽  
Economic Criteria

The theoretical aspects of company’s investment management are discussed. The properties and characteristics of seven main economic criteria-indicators of investment projects, in particular, net present value, profitability index, simple and modified internal rate of return, simple and discounted payback period, efficiency coefficient are considered in detail. The aim of the study is a critical comparative analysis of the most important economic criteria of the company’s investment projects, such as internal rate of return (IRR) and modified internal rate of return (MIRR), their advantages and disadvantages, as well as further development of objective theoretical ideas about properties and relationships criteria for future investments, in particular, between the profitability index (PI) and the modified internal rate of return (MIRR).The economic and mathematical properties of the function describing the dependence of the net present value on the value of the discount rate are studied. The attention of project analysis specialists and top managers of companies is drawn to the shortcomings of the internal rate of return, which, in certain cases, due to the peculiarities of the calculation carries a potential threat of artificially overestimating the efficiency of an investment project. This fact is a significant basis for a complete rejection of using this indicator as a quantitative characteristic of the effectiveness of future production and financial projects. It is proposed to use exclusively the criterion «modified internal rate of return» as an indicator of efficiency of an investment project, which is completely objective, universal and can serve as a basis for calculating the profitability index. A formula of the functional interrelation between the value of the modified internal rate of return and the profitability index of the future production and financial projects of the company is derived.

scholarly journals STUDI KELAYAKAN BISNIS TELL KOPI DENGAN ANALISIS FINANSIAL

2020 ◽  
Vol 10 (2) ◽  
pp. 92-97
Author(s):  
Johan Alfian Pradana ◽  
Ana Komari ◽  
Lolyka Dewi Indrasari
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Payback Period ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Internal Rate

Perlambatan perekonomian di Indonesia, adalah salah satu penyebab daya tarik kepada investor agar melakukan investasi, perampingan pajak dan mempermudah ijin bisnis. Salah satu bisnis yang digemari saat ini adalah membuka kedai kopi. Salah satu kedai yang dijadikan penelitian adalah Tell Kopi yang terletak di Kota Kediri, Jawa Timur. Penelitian ini bertujuan untuk mengetahui layak atau tidaknya bisnis dijalankan menggunakan pendekatan ekonomi teknik. Data yang digunakan adalah biaya variabel dan biaya tetap, dengan tahapan perhitungan peramalan tahun pertama sampai tahun kelima dan pembuatan aliran kas. Dihasilkan Net Cash Flow untuk mengetahui Net Present Value, Internal Rate of Return, Payback Period dan Profitability Index. Dihasilkan nilai Net Present Value sebesar Rp. 130.189.548 > Rp. 123.204.000. (Investasi awal), Internal Rate of Return sebesar 46,9% > 10 % ( rata –rata bunga bank ) , Payback Period bernilai 1 tahun 1 bulan 6 hari dan Profitability Index 2,06 > 1. Dari kriteria tersebut, kedai kopi layak dijalankan dengan memperhatikan target jumlah pengunjung dan target keuntungan yang harus didapatkan setiap harinya

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