Financial investing is an active form effective use temporarily free funds enterprises. This is an investment in:

income-generating stock instruments (shares, bonds and other securities freely tradable on money market);
income-generating types of monetary instruments, such as certificates of deposit;
authorized funds joint ventures with the aim of not only making a profit, but also expanding the sphere of financial influence on other business entities, etc.

The analysis process examines the volume and structure of investment in financial assets, determines the rate of its growth, as well as profitability financial investments in general and individual financial instruments.

A retrospective assessment of the effectiveness of financial investments is made by comparing the amount of income received from financial investments with the average annual amount of this type of asset. The average level of profitability (ARL) may change due to: structure valuable papers(Udi), having different levels of profitability; the level of profitability of each type of securities acquired by the enterprise (DVKi). The total change in the average level of profitability can be calculated using formula (5):

DVKtot = ∑(Udi ·DVKi) (5) Example 26. There is data on long-term financial investments (Table 64), based on which we will perform a retrospective assessment of their effectiveness.

Table 64 – Analysis of the efficiency of using long-term financial investments

The data in Table 64 shows that the return on financial investments for the reporting year increased by 2.16%, including due to changes in:

structures of financial investments:
∆DVK = ∑(∆Udi ·DVKi 0) = [(-3.33) 35 + (+3.33) 30] / 100 = -0.17%
level of profitability of certain types of investments:
∆DVK= ∑(Udi 1 ∆DVKi) = (46.67 5 + 53.33 0) / 100 = +2.33%

The yield of securities must also be compared with the so-called alternative (guaranteed) income, which is taken as the refinancing rate or interest received on government bonds or treasury bills.

Forecasting economic efficiency individual financial instruments can be carried out using both absolute and relative indicators. In the first case, the current market price financial instrument, at which it can be purchased, and its intrinsic value based on the subjective assessment of each investor. In the second case, its relative profitability is calculated.

Difference between price and value financial asset is that the price is an objective declared indicator, and the intrinsic value is a calculated indicator, the result of the investor’s own subjective approach.

V general view can be calculated using formula (6):

Substituting in this formula expected values cash receipts, profitability and duration of the forecasting period, you can calculate the current value of any financial instrument.

If the actual amount of invested costs ( market price) for a financial instrument will exceed its current value, then it makes no sense for an investor to purchase it on the market, since he will receive a profit less than expected. On the contrary, it is profitable for the holder of the security to sell it under these conditions.

As can be seen from the above formula, current value of a financial instrument depends on three main factors: expected cash receipts, the length of the forecast period for generating income and the required rate of return. The forecasting horizon depends on the type of securities. For bonds and preferred shares it is usually limited, and for ordinary shares equals infinity.

The required rate of return, which is included by the investor in the calculation algorithm as a discount, reflects, as a rule, the profitability of alternative investment options for the given investor. It could be the size interest rate By bank deposits, interest rate on government bonds, etc.

Features of the formation of return cash flow by certain species securities determine a variety of models for determining their current value.

The basic model for estimating the current value of bonds with periodic interest payments can be represented by formula (7):

Example 27. It is required to determine the current value of a three-year bond, the face value of which is 1000 rubles, with a coupon rate of 8% per annum, paid once a year, if the discount rate (market rate) is 12% per annum.

Consequently, a rate of return of 12% will be provided when purchasing a bond at a price approximately equal to 900 rubles.

If the required rate of return is 6%, then the current value of the bond will be:

This shows that the current value of a bond depends on the value of the market interest rate and the period until its maturity. If d > k, then the current value of the bond will be less than its face value, i.e. the bond will be sold at a discount. If d< k, то текущая стоимость облигации будет больше номинала, т.е. облигация продается с премией. Если d = k, то текущая стоимость облигации равна ее номиналу.

If a bond's yield does not change over its life, then as the term to maturity decreases, the discount or premium will fall. Moreover, these changes are more significant as the maturity date approaches.

Income from coupon bonds consists of periodic interest payments (coupons) and exchange rate differences between the market and par price of a bond. Therefore, several indicators are used to characterize the yield of coupon bonds:

coupon yield, the rate of which is announced when bonds are issued;
current yield, which is the ratio of interest income to the purchase price of the bond, and can be calculated using formula (8):

A model for estimating the current value of bonds with payment of the entire amount of interest upon its repayment can be represented by the formula
(10):

The model for estimating the current value of bonds sold at a discount without paying interest can be represented by formula (11):

Discount bond yield model:

a) by effective rate percent is calculated using formula (12):

b) at the rate simple interest calculated using the formula PV region (13):

where Pk is the bond rate (the ratio of the purchase price to the par value of the bond);
T – quantity calendar days per year;
t is the number of days until the bond matures.

Example 28. It is required to determine the level of yield of bonds to maturity if the purchase price is 850 rubles, the redemption price (face value) is 1000 rubles, the bond circulation period is 90 days.

Income from shares consists of the amount of dividends received and income from the increase in their value. The current yield is determined by the ratio of the amount of dividends on the stock for Last year to the stock market value according to formula (14):

Using the above models, you can compare the profitability of investing in various financial instruments and choose the most optimal option for investment projects.

The level of return on investment in specific securities depends on:

changes in the level of interest rates on the money market for loan capital and exchange rates;
liquidity of securities, determined by the time required to convert financial investments into cash;
level of taxation of profits and capital gains for different types valuable papers;
the amount of transaction costs associated with the procedure for buying and selling securities;
frequency and time of arrival interest income;
inflation levels, supply and demand and other factors.

The criteria for assessing the effectiveness of investments are divided into three groups: payback period of investments; return on investment; return on investment.
The payback period of investments (Current) is defined as the ratio of the total amount of investment (Inv) to the amount of profit (P) or the amount of increase in profit (AP):

T ok= Inv/R,
or
T ok = Inv/D^
If there is significant unevenness in profit generation over time, the payback period for investments can be determined by comparing the total amount of investment with the amount of increase in profit. The payback period corresponds to the period in which the amount of profit growth calculated in this way is equal to the amount of investment.
The return on investment can be assessed using indicators of the additional volume of sales of services per 1 ruble. investments, discounted income, future value of investments.
Additional volume of sales of services by 1 rub. investment is calculated as the ratio of the increase in sales of products obtained as a result of additional investments (AN) to the total amount of investment:
EI = D^Inv,
where EI is investment efficiency.
Scientifically grounded is the assessment of investment efficiency, based on methods of increasing or discounting cash receipts, taking into account changes in the value of money over time.
Profitability (profitability) is assessed by comparing the income received from a given type of investment with the amount of investment. As evaluation parameters, you can use the indicator of the overall economic efficiency of investments and a more specific indicator - return on invested capital.
The overall economic efficiency of investments in a separately operating enterprise is defined as the ratio of the increase in profit to the total amount of investment that caused this increase; for a newly created enterprise - as the ratio of planned profit to the total amount of investment:
EIbsh ^N/Inv,
or
EIbsh = P/Inv.

Return on invested capital (ROI) is determined by the ratio of the total amount of profit to the total amount of investment:
DVK = R/Inv.
Accordingly, the profitability of each type of investment can be calculated as the inverse indicator:
P = DVK Inv.
This method allows, if there are alternative options for long-term financial investments, to choose an option that is more profitable for the enterprise.
A comprehensive assessment of indicators characterizing the effectiveness of financial investments can be carried out using the data in Table. 10.4.
Kg = pPRk;
Kg =$.07-1.78=^2D5=1.69 100=169.
Thus, as a result comprehensive assessment indicators of the effectiveness of financial investments revealed that in the reporting year, the effectiveness of investments increased by 69% compared to the previous year, which characterizes investment attractiveness enterprises with positive side.
Table 10.4
Analysis of financial investment performance indicators

Financial investment is an active form of effective use of temporarily free funds of an enterprise. It can be carried out in various forms:

1) investing capital in income stock instruments(shares, bonds and other securities freely tradable on the money market);
2) investing capital in profitable types of monetary instruments, such as certificates of deposit;
3) investing capital in authorized funds of joint ventures with the aim of not only making a profit, but also expanding the sphere of financial influence on other business entities, as well as obtaining more profitable sources of raw materials or sales markets.

In the process of analysis, the volume and structure of investment in financial assets is studied, the rate of its growth is determined, as well as the profitability of financial investments in general and individual financial instruments.

Retrospective assessment of the effectiveness of financial investments

is made by comparing the amount of income received from financial investments with the average annual amount of this type of asset. Average level of profitability (DVK) may change due to:

structures of securities with different levels of profitability (G);
level of profitability of each type of securities acquired by the enterprise ( DCK".).

DVK o6sch = ЪShchuDVK g

Forecasting the economic efficiency of individual financial instruments can be done using both absolute and relative indicators. In the first case, the current market price of a financial instrument at which it can be purchased and its intrinsic value are determined based on the subjective assessment of each investor. In the second case, its relative profitability is calculated.

The difference between price and value of a financial asset is that price is an objective declared indicator, and intrinsic value- a calculated indicator, the result of the investor’s own subjective approach.

The current intrinsic value of any security in general can be calculated using the formula

RUTHY = I

Where RUf and - real current value of a financial instrument;

SR p- expected return cash flow in um period;

G- expected or required rate of return on a financial instrument;

P- number of periods of income generation.

By substituting the values of expected cash receipts, profitability and duration of the forecast period into this formula, you can calculate the current value of any financial instrument.

If the actual amount of invested costs (market value) for a financial instrument exceeds its current value, then there is no point for the investor to purchase it on the market, since he will receive a profit that will be less than expected. On the contrary, it is profitable for the holder of this security to sell it under these conditions.

As can be seen from the above formula, the current value of a financial instrument depends on three main factors: expected cash receipts, the duration of the forecast period for generating income and the required rate of return. The forecasting horizon depends on the type of securities. For bonds and preferred shares it is usually limited, and for ordinary shares it is infinite.

The required rate of return, which is included by the investor in the calculation algorithm as a discount, usually reflects the profitability of alternative investment options. This could be the interest rate on bank deposits, the interest rate on government bonds, the weighted average price investment resources, desired rate of return, etc.

Bond yield analysis. Bonds belong to the class of securities that confirm the issuer's obligation to reimburse the nominal value to their holder within a specified period of time with the payment of a fixed interest income. According to the forms of payment of income, they are divided into interest and discount.

By interest bonds, the terms of the issue provide for periodic interest payments in accordance with the coupon rate established on them. There are bonds with a fixed and floating interest rate, which changes depending on the level of inflation or the interest rate for the loan. Interest on them can be paid evenly or at the end when they are repaid.

By discount The terms of the bonds do not provide for the payment of interest income. The bondholder's income is formed as the difference between the par value of the bond and its acquisition price, which is set on a discount basis. Such a bond generates cash flow only once - at the time of its maturity.

The peculiarities of the formation of return cash flow for certain types of securities determine the variety of models for determining their current value and profitability.

Basic model for estimating the current value of bonds with periodic interest payments looks in the following way:

(1 + g)"

Where RU region- current value of bonds with periodic interest payments;

SE p- the amount of interest received in each period (the product of the bond’s face value and the announced interest rate (L, X to s))

N^- par value of the bond, redeemable at the end of its circulation period (/);

To, - annual coupon interest rate.

Example. It is required to determine the current value of a three-year bond, the face value of which is 1000 rubles, with a coupon rate of 8% per annum, paid once a year, if the discount rate (market rate) is 12% per annum.

RKb, =

(1 + 0,12) (1 + 0,12) 2 (1 + 0,12) 3 (1 + 0,12)

Consequently, a rate of return of 12% will be provided when purchasing a bond at a price approximately equal to 900 rubles.

If the duration of the bond is two years, then its current value, all other things being equal, will be

g region

(1 + 0,12) (1 + 0,12) 2 (1 + 0,12)

With a maturity of one year, its present value will be equal to

80 1000 (1 + 0,12) + (1 + 0,12)

Thus, as the term to maturity of the bond decreases, its current value, other things being equal, will increase, gradually approaching the face value.

If the required rate of return is 6%, then the present value of a three-year bond is

G U region

(1 + 0.06) (1 + 0.Rev) 2 (1 + 0.Rev) 3 (1 + 0.06)

As the maturity period shortens, its present value will fall:

g region

(1 + 0.06) (1 + 0.Rev) 2 (1 + 0.06)

80 1000 (1 + 0,06) + (1 + 0,06)

This shows that the current value of a bond depends on the market interest rate and the period to maturity. If g>k, then the current value of the bond will be less than its face value, i.e. the bond will be sold at a discount. If g then the current value of the bond will be greater than the face value, i.e. the bond will sell at a premium. If g = k, then the current value of the bond is equal to its face value.

It follows from this that if the yield of a bond does not change during its circulation period, then as the period to maturity decreases, the amount of the discount or premium will fall. Moreover, these changes are more significant as the maturity date approaches (Figure 4.4).

Bond rate

The income on coupon bonds consists, firstly, of periodic interest payments (coupons), and secondly, of the exchange rate difference between the market and nominal price of the bond. Therefore, several indicators are used to characterize the yield of coupon bonds."

A) coupon yield, the rate of which is announced when the bonds are issued;
b) current profitability, which is the ratio of interest income to the bond purchase price:

Y = Mo&1 x K = 1000 x8% = 8.51%,

to s- coupon interest rate;

P - bond purchase price (in in this example- 940 rub.). In the example under consideration, the current bond yield is higher than the announced coupon rate of return (8%) due to

with the fact that it was purchased at a price below its face value. On the contrary, if the purchase price of the bond were higher than its par value, then its current yield would be lower than the coupon rate of return;

V) yield to maturity."

UTM =

SR + (M region -P)/p + 2

80+ (1000-940)/3 (1000+ 940)/2

Where ST- annual amount coupon income on bonds; P- number of years until maturity.

The yield to maturity is higher than the current yield also because the bond was purchased at a price below its face value.

Model for estimating the current value of coupon bonds with payment of the entire amount of interest upon maturity:

(1 + 0,12) 3

UU + (UUh? xp) ru -___? __

ABOUT + G)”

1000+ (1000x0.08x3)
(1 + 0D2) 3

Since this bond does not generate current income, its current yield is not determined, and the yield to maturity is calculated as follows:

UTM =^~ P ^ n = (1240-940)/3 =

(14 + P) / 2 (1000+ 940)/2

where 5=Н + (УУх/:х/7) is the total amount of income from the bond, paid at the end of its circulation period.

Model for estimating the current value of bonds sold at a discount without paying interest:

(1 + 0,12) 3
711.7 rub.

Discount bond yield model

1) at the effective interest rate:

2) at simple interest rate:

UTM =

R where УУ is the face value of the bond;

R - bond purchase price;

/ - number of days until bond maturity.

Suppose you need to determine the level of yield of bonds to maturity, if the purchase price is 850 rubles, the redemption price (face value) is 1000 rubles, the bond circulation period is 90 days: at the effective interest rate

1 = 0,915 = 91,5%;

at simple interest rate

UTM =

100-85 365 85 X 90
71,56%.

Analysis of stock returns. A share is a security certifying the participation of its owner in the formation authorized capital joint stock company and giving the right to receive a corresponding share of its profits in the form of dividends and accumulated capital. To assess its current value and profitability, it is necessary to take into account the type of share (preferred or common), definite or indefinite period of its circulation, type dividend payments(with a stable, constantly increasing or fluctuating level of dividends).

Model for estimating the current value of preferred and common shares with a stable (fixed) level of dividends is determined by the ratio of the amount of the annual dividend to the market rate of return:

RU = = 200 = 1333 rubles

Where /). - the amount of the annual dividend;

G- market rate of return in the form of a decimal fraction.

The current value of shares with a uniformly and constantly increasing level of dividends is defined as follows (Gardon model):

LO + me)

where /), - the amount of the last dividend paid;

g- dividend growth rate as a decimal fraction. Example. The last amount of dividend paid on the share was 150 rubles. The annual dividend increase is 5%. The expected annual rate of return is 15%. Under such conditions, the market value of the share will be

150(1 + 0,05) 0,15-0,05

To determine the current value of a common share used for certain period , the following model is used:

RU= Y

ACC "

n= 1 (1 + d) p(1 + g ) 1

Where KS- market value of the share at the end of the period of its sale;

P- number of periods of use of the promotion.

Example. nominal cost shares - 1000 rubles, dividend level - 20%, expected market value of the share at the end of the period of its sale - 1100 rubles, market rate of return - 15%, period of use of the share - 3 years, frequency of dividend payments - once a year.

1000x0.2 1000x0.2 1000x0.2 1100 _
-- +--t +-4- + -g = 1178 rub.
(1 + 0,15) (1 + 0,15) 2 (1 + 0,15) 3 (1 + 0,15) 3

Income from shares consists of the amount of dividends received and income from the increase in their value. The current yield is determined by the ratio of the amount of dividends on the stock for the last year to the market value of the stock:

1 A

The stock market value is calculated in comparison with the bank deposit rate (G

P"= - x100%.

The final return on a stock (K) is the ratio of the total income to its initial cost:

y= R| +(/> P 0) = Ts Shch. = y y

r r r as 9

g 0 g 0 g 0

where /), - income in the form of dividends received;

R ]- the current market price of the share at which it can be sold;

P 0- share purchase price;

U (1 - dividend yield stock;

U- capitalized return of the stock.

Let’s assume that an enterprise two years ago acquired a block of shares at a price of 10 thousand rubles. for each. The current market price of the share is 15 thousand rubles, and the amount of dividends received per share for this period is 3 thousand rubles. Let's calculate its profitability:

3 + 05 10) x100 = А x іоо + 15_ів x іоо = з + 50 = 80%. 10 10 10

Using the above models, you can compare the profitability of investing in various financial instruments and choose the most optimal option for investment projects.

It should be taken into account that investment returns expressed in different currencies are not comparable. For example, if the interest rate in rubles is higher than the interest rate in foreign currency, then it is impossible to draw a conclusion about the profitability of investing money in a ruble deposit. Let's say a share was bought for 1,500 rubles, and a year later sold for 1,750 rubles. Its annual profitability will be

1750-1500

x 100 = 16.67%.

If a share was purchased at a dollar exchange rate of 60 rubles, and sold at a rate of 64.8 rubles, then the purchase price in dollars is $25, and the sales price is $27. The yield in foreign currency is

Y = -x 100 = 8.0%.

Profitability in rubles and profitability in foreign currency are related as follows:

U r= ^.x(1 + Y 5)-1 = - x(1 + 0.08)-1 = 0.166 (16.6%);

T = ~~ x (1 +) -1 = -ttt x (1 + 0.166) -1 = 0.08 (8.0%),

where Y is profitability in rubles;

Y - profitability in foreign currency;

K 2, K]- exchange rate when selling and buying, respectively.

Consequently, knowing exchange rates and the profitability of a financial asset in one of the currencies, you can determine its profitability in another currency.

The level of return on investment in specific securities depends on the following factors:

changes in the level of interest rates on the money market for loan capital and exchange rates;
liquidity of securities, determined by the time required to convert financial investments into cash;
level of taxation of profits and capital gains for different types of securities;
the amount of transaction costs associated with the procedure for buying and selling securities;
frequency and time of receipt of interest income;
level of inflation, supply and demand, etc.

annotation

Within the framework of this work, the basic principles for assessing the effectiveness of financial investments are given. A methodology for assessing investments is presented. The main indicators of the effectiveness of investment projects and methods for their evaluation are listed.

Introduction... 3

1. Basic principles for assessing the effectiveness and financial feasibility of investment projects.. 4

1.1. Definition, types and principles of efficiency of investment projects. 4

1.2. Cash flows investment project. Financial feasibility of the project 7

2. Investment assessment methodology.. 11

2.1. General provisions on economic evaluation of investment projects. eleven

2.2. The future value of the annuity. 13

2.3. Discount coefficient. Discount rate. 14

3. Key performance indicators of investment projects and methods for their evaluation.. 22

3.1. Classification of investment project performance indicators. 22

3.2. Indicators that do not involve the use of the discounting concept. 22

3.3. Indicators of the effectiveness of investment projects, determined based on the use of the discounting concept. 27

Conclusion... 33

References... 34

Introduction

The term "investment" comes from the Latin word "invest", which means to invest. In a broader interpretation, it expresses the investment of capital with the aim of its further increase. The capital gains resulting from the investment must be sufficient to compensate the investor for not consuming the available funds in current period, reward him for the risk and compensate for losses from inflation in the future.

Investments express all types of property and intellectual values that are directed to objects entrepreneurial activity, as a result of which profit (income) is generated or another useful effect is achieved.

Capital investments are inextricably linked with the implementation of real investment projects.

Investment project - justification of economic feasibility, volumes and timing of implementation capital investments, including the necessary documentation developed in accordance with standards accepted in Russia (norms and rules), as well as a description of practical actions for the implementation of investments (business plan).

The purpose of this work is to assess the effectiveness of financial investments, i.e. investment projects.

Realization of the goal involves solving the following tasks:

Reveal the basic principles for assessing the effectiveness and financial feasibility of investment projects;

Describe the methodology for assessing investments;

List the main performance indicators of investment projects and describe methods for their evaluation.

1. Basic principles for assessing the effectiveness and financial feasibility of investment projects

1.1. Definition, types and principles of efficiency of investment projects

Implementation effective projects increases the gross domestic product (GDP) available to society, which is then divided between the entities participating in the project (firms, shareholders and employees, banks, budgets of different levels, etc.). The receipts and expenses of these entities are determined different kinds efficiency of the investment project.

The effectiveness of the project as a whole;

Effectiveness of participation in the project.

The effectiveness of the project as a whole is assessed in order to determine the potential attractiveness of the project for possible participants and to search for sources of financing. It includes:

Public (socio-economic) effectiveness of the project;

Commercial effectiveness of the project.

Indicators social efficiency take into account the socio-economic consequences of the investment project for society as a whole.

Indicators commercial efficiency of the project take into account the financial consequences of its implementation for the only participant implementing the investment project, on the assumption that he makes all the costs necessary for the implementation of the project and uses all its results.

The basis for assessing the effectiveness of investment projects (IP) is the following basic principles:

Review of the project throughout its entirety life cycle(billing period);

Modeling of cash flows, including all inflows and outflows associated with the implementation of the project Money for the billing period;

Comparability of comparison conditions various projects(project options);

The principle of positivity and maximum effect. In order for an individual entrepreneur to be considered effective from the investor’s point of view, it is necessary that the effect of the project’s implementation be positive; when comparing alternative IPs, preference should be given to the project with the greatest effect value;

Taking into account the time factor. When assessing the effectiveness of a project, various aspects of the time factor must be taken into account, including the dynamism of the project parameters and its economic environment; time gaps (lags) between the production of products or the receipt of resources and their payment; unequal value of costs and/or results at different times;

Accounting only for upcoming costs and revenues. When calculating efficiency indicators, only the costs and revenues expected during the implementation of the project should be taken into account, including costs associated with attracting previously created production assets, as well as upcoming losses directly caused by the implementation of the project (for example, from the cessation of existing production in connection with the organization in its place new). Previously created resources used in the project are valued not by the costs of their creation, but by the opportunity cost (opportunity cost), reflecting maximum value lost profits associated with their best possible alternative use. Past, already incurred costs that do not provide the possibility of obtaining alternative ones (i.e., those obtained outside of this project) income in the future (sunk costs, sunk cost) are not taken into account in cash flows and do not affect the value of performance indicators;

Taking into account the most significant consequences of the project. When determining the effectiveness of an IP, all consequences of its implementation, both directly economic and non-economic, must be taken into account;

Taking into account the presence of different project participants, the discrepancy of their interests and different estimates of the cost of capital, expressed in individual values of the discount rate;

Multi-stage assessment. At various stages of project development and implementation, its effectiveness is determined anew, with varying depth of elaboration;

Taking into account the impact of inflation (taking into account changes in prices for various types of products and resources during the project implementation period);

Taking into account the impact of uncertainty and risks accompanying the implementation of the project.

Evaluating the effectiveness of investment projects is carried out in two stages.

At the first stage, performance indicators of the project as a whole are calculated. The purpose of this stage is aggregated economic assessment design solutions and creating the necessary conditions for finding investors. For local projects, only their commercial effectiveness is assessed and, if it turns out to be acceptable, then we can move on to the second stage of assessment.

If the source and terms of financing are already known, the commercial viability of the project need not be assessed.

The second stage is carried out after the development of a financing scheme. At this stage, the composition of participants is clarified and the financial feasibility and effectiveness of participation in the project of each of them is determined.

For local projects, at this stage the effectiveness of participation in the project of individual participating enterprises and the effectiveness of investing in shares of such joint-stock enterprises are determined.

1.2. Cash flows of an investment project. Financial feasibility of the project

The effectiveness of the investment project is assessed during the calculation period, covering the time interval from the start of the project to its termination.

The billing period is divided into steps - segments, within which the data used to assess financial and economic indicators is aggregated. The calculation steps are identified by their numbers (0, 1,…). Time in billing period measured in years or fractions of a year and counted from a fixed moment t0 = 0, taken as the base moment (usually the moment of the beginning or end of the zero step is taken as the base moment; when comparing several projects, it is recommended to choose the same base moment for them). In cases where the base is the beginning of the zero step, the moment of the beginning of step number m is denoted by tm; if the base moment is the end of the zero step, tm denotes the end of step number m. The duration of different steps may vary.

Cash Flow (CF) of an investment project is the time dependence of cash receipts (inflows) and payments (outflows) during the implementation of the project, determined for the entire billing period.

The cash flow value is denoted by Æ(t),(CFt), if it refers to time t, or by Æ(m) (CFm), if it refers to step m.

In cases where we're talking about about several flows or about some component of a cash flow, the indicated designations are supplemented with the necessary indices.

At each step, the cash flow value is characterized by:

An inflow equal to the amount of cash receipts (or results in value terms) at this step (Pm);

Outflow equal to payments at this step (Om);

Balance (active balance, effect) equal to the difference between inflow and outflow (Pm - Om).

Types of financial investments. Retrospective assessment of financial investments. Estimation of current value, current yield and yield to maturity of various financial instruments.

Financial investment is an active form of effective use of temporarily free funds of an enterprise. It can come in various forms.

1. Investment of capital in profitable stock instruments (shares, bonds and other securities freely tradable on the money market).

2. Investment of capital in profitable types of monetary instruments, such as certificates of deposit.

3. Investing capital in the authorized capital of joint ventures with the aim of not only making a profit, but also expanding the sphere of financial influence on other business entities.

Retrospective assessment of the effectiveness of financialinvestments is made by comparing the amount of income received from financial investments with the average annual amount of this type of asset. Average profitability level ( DCK)can change due to:

structures of securities with different levels of profitability ( Ud i);

level of profitability of each type of securities acquired by the enterprise ( DVK i):

DVK o 6sch =∑ (UD i × DVK i).

Table data 23.6 show that the profitability of financial investments for the reporting year increased by 1.4%, including due to changes in:

structure of financial investments

∆DVK =∑(∆Sp i × DVK i 0) = [(+10) × 15 + (-10) × 10] ∕ 100 = +0,5%

level of profitability of certain types of investments

∆DVK =∑(Ud i 1× ∆DVK i)= (90 × 1 + 10 × 0) ∕ 100 = +0,9%.

Table 23.6

Analysis of the effectiveness of using long-term financial investments

Index	Last year	Reporting year	Change
Amount of long-term financial investments, thousand rubles.			+500
Including:
in shares			+700
in bonds			-200
Specific gravity, %:
shares	80,0		+ 10
bonds	20,0		-10
Income, thousand rubles:
from shares			+132
from bonds			-20
Return on long-term financial investments, %		15,4	+ 1,4
Including:
shares			+ 1
bonds			-

The yield of securities must also be compared with the so-called alternative (guaranteed) income, which is the refinancing rate, or the interest received on government bonds or treasury bills.

Assessment and forecasting of the economic efficiency of individual financial instruments can be carried out using both absolute and relative indicators. In the first case, the current market price of a financial instrument at which it can be purchased and its intrinsic value are determined based on the subjective assessment of each investor. In the second case, its relative profitability is calculated.

The difference between price and value of a financial asset is that price - this is an objective declared Indicator, and intrinsic value - calculated indicator, the result of the investor’s own subjective approach.

The current intrinsic value of any security in general can be calculated using the formula

PV f.i= ,

Where РV f.u - real current value of a financial instrument;

СF n- expected return cash flow in P-th period;

d- expected or required rate of return on a financial instrument;

P- number of periods of income generation.

By substituting the values of expected cash receipts, profitability and duration of the forecast period into this formula, you can calculate the current value of any financial instrument.

If the actual amount investment costs(market value) of a financial instrument will exceed its current value, then there is no point for an investor to purchase it on the market, since he will receive a profit less than expected. On the contrary, it is profitable for the holder of this security to sell it under these conditions.

As can be seen from the above formula, The current value of a financial instrument depends on three main factors: expected cash receipts, the duration of the forecast period for generating income and the required rate of return. The forecasting horizon depends on the type of securities. For bonds and preferred shares it is usually limited, and for ordinary shares it is infinite.

The required rate of return, which is included by the investor in the calculation algorithm as a discount, reflects, as a rule, the profitability of alternative investment options for the given investor. This could be the interest rate on bank deposits, the level of interest on government bonds, etc.

Features of the formation of return cash flow for certain types of securities determine the variety of models for determining their current value.

Basic model for estimating the current value of bonds with periodic interest payments as follows:

Where PV region - the current value of bonds with periodic interest payments;

СF n - the amount of interest received in each period (the product of the bond's face value and the announced interest rate ( N oδl × k);

N region - par value of the bond, redeemable at the end of its circulation period ( t);

k- annual coupon interest rate.

Example. It is required to determine the current value of a three-year bond, the face value of which is 1000 rubles. and with a coupon rate of 8% per annum, paid once a year, if the discount rate (market rate) is 12% per annum.

Consequently, a rate of return of 12% will be provided when purchasing a bond at a price approximately equal to 900 rubles.

If the market rate of return is 6%, then the current value of the bond will be:

This shows that the current value of a bond depends on the market interest rate and the period to maturity. If d > k, then the current value of the bond will be less than its face value, i.e. the bond will be sold at a discount. If d< k, then the current value of the bond will be greater than its face value, i.e. the bond is selling at a premium. If d = k, then the current value of the bond is equal to its face value.

The income on coupon bonds consists, firstly, of periodic interest payments (coupons), and secondly, of the exchange rate difference between the market and nominal price of the bond.

Therefore, several indicators are used to characterize the yield of coupon bonds:

a) coupon yield, the rate of which is announced upon issue of bonds;