Analysis of investment projects: guidelines

Any person who has a certain (quite large) amount of temporarily free funds, wants them not just to lie in the far corner, slowly depreciating under the influence of the inexorable "lady" of inflation, but were invested in a profitable business, thus constantly increasing. However, in order not to burn out when investing money, it is necessary to analyze investment projects. About him and talk in this article.

Analysis of investment projects is a verification of the reality of their implementation, as well as the identification of all possible risks for the project and the likelihood of their occurrence, undertaken in order to make an adequate decision on investing or not investing in a particular enterprise. Carrying out of detailed analysis will help to keep available capital from unprofitable projects, and also maximize it by investing in that enterprise that will bring maximum profit with minimal risk. The development and analysis of investment projects are closely related, since the person developing the project understands that the investor will be interested in choosing the most advantageous offer for himself. This is a trick - some dishonest entrepreneurs intentionally "adjust" the data of their business project to those that the investor wants to see, although they differ from the real ones. That is why a depositor who wants to earn, it is necessary to be able to independently analyze the effectiveness of investment projects, so as not to become a victim of fraud.

Here is a technique that is used in the analysis of most business plans. For most investors, the determining factor that influences 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 depreciates all investments. If the indicator of future value suits the investor, he invests money in the enterprise.

However, most often when presenting a business project, the future value of the investment has already been announced. Then it is necessary to calculate the inverse measure - the current value (it is sometimes called net reduced). Its meaning is to understand how much money you need to invest today in order to get the promised amount in the future.

Carrying out the analysis of investment projects, entrepreneurs should be guided by a certain base of comparison in order to understand whether this project is profitable in these market conditions or not. As a rule, the base of comparison is the bank interest rate on deposits. Why it? Yes, because the investor can always invest money in the bank, while ensuring a minimal risk, because the deposits are, as a rule, insured. Thus, in order to take more risks, the businessman should realize that a more dangerous project will bring more money in the long term, rather than simply placing a deposit. Only in this case, you can expect to receive a positive response from the investor - because who does not agree to risk - do not see the splashing of expensive champagne in your crystal glass!

We briefly described how and for what it is necessary to carry out an analysis of investment projects. Of course, in order to become a long-term investment, it is necessary to read a lot of special literature, but there is already some general idea among readers. Successful investment and huge profits to you, dear businessmen!