Methodological features of the analysis of alternative investment projects

DOI: 10.31673/2415-8089.2019.041421

Abstract

The article is devoted to the consideration of existing approaches to the assessment of alternative investment projects, generalization and specification of selection criteria and methods. It is established that the need for a comparative assessment of investment alternatives is associated mainly with the limited financial resources for their implementation and the practical inappropriateness (impossibility) of the simultaneous implementation of existing alternatives. It has been determined that the methods of net present value and internal rate of return are most often used to evaluate alternative investment decisions. It is shown that the main reasons for the contradictions of the NPV and IRR methods in the process of evaluating alternative projects are a significant difference in their scale, as well as in the intensity of cash flows at different stages of the life cycle. The expediency and technology of using various assessment methods to ensure the reliability of the calculations and the adequacy of their results are substantiated. A number of practical aspects have been established that must be taken into account in the process of evaluating investment alternatives.

Key words: investment, project, alternative (mutually exclusive) projects, cash flow, performance indicators, net present value, internal rate of return.

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