Any person who has a certain (sufficiently large) amount of temporarily available funds wants them not only to lie in the far corner, slowly depreciating under the influence of the inexorable "lady" of inflation, but to invest in a profitable business, thus constantly increasing. However, in order not to burn out when investing money, it is necessary to analyze investment projects. We will talk about him in this article.
Analysis of investment projects is a check of the reality of their implementation, as well as the identification of all possible risks for the project and the likelihood of their occurrence, carried out in order to make an adequate decision on investing or not investing in a particular enterprise. A detailed analysis will help to save the available capital from unprofitable projects, as well as maximize it by investing money in the enterprise that will bring maximum profit with minimal risk. The development and analysis of investment projects is closely related, since the person developing this or that project understands that the investor will be interested in choosing the most advantageous offer for himself. This is the catch - some dishonest entrepreneurs specifically “tailor” the data of their business project to those that the investor wants to see, although they differ from the real ones. That is why the investor who wants to earn money must be able to independently analyze the effectiveness of investment projects so as not to become a victim of deceivers.
Here is a technique that is used in the analysis of most business plans. For most investors, the determining factor influencing the decision to invest is the so-called future value of their investment, that is, in fact, the amount of funds that they can receive at the end of the investment project. This indicator is calculated taking into account the discount rate (in fact, the profitability of the project), as well as the inflation factor, which inevitably devalues all investments. If the indicator of future value suits the investor, he invests in the company.
However, most often when presenting a business project, the future value of the investment is already announced. Then it is necessary to calculate the inverse indicator - the current value (it is sometimes called the net present value). Its meaning is to understand how much money you need to invest today to get the promised amount in the future.
When analyzing investment projects, entrepreneurs should focus on a certain comparison base in order to understand whether this project is beneficial in these market conditions or not. As a rule, the base of comparison is the bank interest rate on deposits. Why exactly her? Yes, because the investor can always invest the available funds in the bank, while ensuring minimal risk due to the fact that deposits are usually insured. Thus, in order to take a greater risk, a businessman must be aware that a more dangerous project will bring more money in the future than simply placing a deposit. Only in this case can one expect to receive a positive response from the investor - after all, whoever does not agree to take risks doesn’t see a splash of expensive champagne in his crystal glass!
We briefly described how and why it is necessary to carry out an analysis of investment projects. Of course, in order to become a doc of investment, you need to read a lot of specialized literature, but readers already have some general idea. Good investment and huge profits to you, dear businessmen!