A systematic approach for the analysis of the economic viability of investment projects

José Donizetti De Lima, Marcelo Gonçalves Trentin, Gilson Adamczuk Oliveira, Dayse Regina Batistus and Dalmarino Setti

International Journal of Engineering Management and Economics, 2015, vol. 5, issue 1/2, 19-34

Abstract: This paper aims to present a systematic for the analysis of the economic viability of investment projects (SAEVIP) in fixed assets. In the literature, it is possible to identify the fundamental elements to evaluate the merit of the investment project (IP). To assess the dimension 'return', indicators are analysed: net present value (NPV), NPV annualised (NPVA), index benefit/cost (IBC), return on investment annualised (ROIA), index ROIA/minimum rate of attractiveness (MRA) and return on investment (ROI). An indicator analysis for dimension 'risk' is performed by internal rate of return (IRR), Payback, index MRA/IRR, index Payback/N and Fisher point. In addition, a joint assessment of indicator of risk and return is performed. A sensitivity study is promoted on the main variables involved in economic performance of the IP (MRA, costs and revenues). To validate the SAEVIP proposal, a case study shows the wealth of information generated by the application of this systematic.

Keywords: decision making; investment projects; project viability; economic viability; fixed assets; economic analysis; sensitivity analysis; project costs; project revenues; discounted cash flow; DCF; multi-index methodology; project returns; project risks; production verticalisation; project planning; product development. (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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