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September 2024 (published: 09.09.2024)
Number 3(58)
Home > Issue > A financial model for assessing the investment attractiveness of a project
under conditions of limitation of certain parameters
Lisitsa M.I. , Popov V.P.
The subject of the research is the process of financial modeling within the framework of investment design, which is the object of the study. At the same time, the purpose of the work is to substantiate the approach indicated in the title, physically embodied in a template programmed by means of a large-format spreadsheet and performing automatic calculations, which does not require a high level of financial qualification from its potential users. The hypothesis of the study is revealed through its assumptions and can be summarized as an asymmetric understanding of the project by its author and potential investor, in connection with which it is necessary to form ideas about the project that smooth out the asymmetry by excluding manipulations, in particular, related to the assessment of efficiency. For this purpose, specific tasks are solved: 1) fixing assumptions and interpretations used in work; 2) formulation of a list of conditions and parameters that make up the content of the study; 3) providing a mathematical solution, physical embodiment and graphic representation of the development; 4) approbation of an approach based on a randomly found example that is in the public domain. Methodologically, the study is based on certain aspects of the theory of bounded rationality and methods of financial calculations. The result of the scientific novelty is the development of the approach indicated in the title of the study, including its particular implementations: 1) interpretations of: a) technical design; b) business idea; c) financial design; d) investment attractiveness; e) financial model; 2) a template programmed by means of a large-format spreadsheet and performing automatic calculations; 3) the perpetual annuity model, which fixes the volume of capital investments in the pre-numerando regime, as well as the amount of net profit and depreciation in the post-numerando regime, in relation to the measurement of: a) net present value; b) internal rate of profit. As a final conclusion, the proposed approach can be recognized as workable within the framework of projects that provide for capital investments, but excludes the calculation of performance indicators that do not correspond to the initially laid mathematical prerequisites.
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Keywords: capital investments; project; technical concept; business concept; financial concept; assessment of investment attractiveness; financial model.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
UDC 336.645.1
A financial model for assessing the investment attractiveness of a project
under conditions of limitation of certain parameters
The subject of the research is the process of financial modeling within the framework of investment design, which is the object of the study. At the same time, the purpose of the work is to substantiate the approach indicated in the title, physically embodied in a template programmed by means of a large-format spreadsheet and performing automatic calculations, which does not require a high level of financial qualification from its potential users. The hypothesis of the study is revealed through its assumptions and can be summarized as an asymmetric understanding of the project by its author and potential investor, in connection with which it is necessary to form ideas about the project that smooth out the asymmetry by excluding manipulations, in particular, related to the assessment of efficiency. For this purpose, specific tasks are solved: 1) fixing assumptions and interpretations used in work; 2) formulation of a list of conditions and parameters that make up the content of the study; 3) providing a mathematical solution, physical embodiment and graphic representation of the development; 4) approbation of an approach based on a randomly found example that is in the public domain. Methodologically, the study is based on certain aspects of the theory of bounded rationality and methods of financial calculations. The result of the scientific novelty is the development of the approach indicated in the title of the study, including its particular implementations: 1) interpretations of: a) technical design; b) business idea; c) financial design; d) investment attractiveness; e) financial model; 2) a template programmed by means of a large-format spreadsheet and performing automatic calculations; 3) the perpetual annuity model, which fixes the volume of capital investments in the pre-numerando regime, as well as the amount of net profit and depreciation in the post-numerando regime, in relation to the measurement of: a) net present value; b) internal rate of profit. As a final conclusion, the proposed approach can be recognized as workable within the framework of projects that provide for capital investments, but excludes the calculation of performance indicators that do not correspond to the initially laid mathematical prerequisites.
Read the full article
Keywords: capital investments; project; technical concept; business concept; financial concept; assessment of investment attractiveness; financial model.
DOI 10.17586/2310-1172-2024-17-3-14-27