On the evaluation of the project investment decision-making Analysis and Optimization

I. Introduction Since the transformation of the mode of Economic Development the past three decades, China's national economy to achieve sustained rapid Development at home and abroad caused by the constant attention. Asian financial crisis, China's implementation of active monetary policy, rapid Economic Development has laid a foundation money, while increasing fiscal policy to support the government's efforts to actively improve the local infrastructure, have launched large-scale construction projects, including agriculture, forestry, water conservancy, electricity, roads, railways, housing, urban infrastructure construction and other industries. These projects have a number, large-scale, long construction period, the uncertainty of the characteristics of big gains, although Investment and financing system reform in China on a series of explorations, made some progress on early assessment of Investment projects played a positive impact, but not enough to change the current status of the confusion assessment of Investment projects, especially after the financial crisis in 2008, the National Development and Reform Commission issued four trillion The Economic stimulus package, each of the local governments have launched large-scale construction projects, which also exposed the total Investment is too large, structural imbalances, budget overruns and other serious problems, and analysis of the overall Investment project is an important factor behind one of the current Investment decision-making evaluation more from a financial point of view, analysis of indicators derived a variety of financial support, in order to determine the feasibility of the project, but not difficult to find in-depth study of financial indicators alone there are many difficulties in the evaluation process and difficulties, therefore, to optimize Investment making evaluation very important.

Second, the status of the project Investment decision-making analysis both for the evaluation of government Investment or corporate Investment, capital investment are content with a unique investment, the investment amount and more influence for a long time, poor liquidity and investment risk characteristics, which also determines the importance of the project investment decisions, how to choose, through the evaluation have been measured to ensure the company's investment decisions are not mistakes.

(An indicator of capital investment in the project investment decision making evaluation is used to measure and compare the feasibility of investment projects, in order to make program decisions, according to quantitative standards and scales from the perspective of financial evaluation, investment decision-making evaluation include investment margins, static investment payback period, net present value, net present value rate, profitability index and internal rate of return. The first two indicators of non-discounted indicators in the calculation does not consider time value of money factor, then four indicators discount indicator, the indicator calculation process to fully consider and utilize the time value of money from the non-discounted indicators index to discount the transition also reflects investors' value for money and risk further cost awareness and concern.

Evaluation of non-discounted with a simple calculation, clarity, etc., but did not consider the time value, which may lead to decision-making failures. Static investment payback period indicator more clearly reflect the investment recovery time, but can not explain the benefits of investment recovered Investment profit margin, while considering the full benefits of the project can create, but can not make up for lack of time to consider the value problems arising, which may still result in failure of decision-making when the non-discounted evaluation of the evaluation findings and evaluation of the evaluation findings discounted conflict should be discounted subject to evaluation of the evaluation findings, it is because money impact of time value investors often an important factor in investment decisions. NPV is a very important project investment evaluation, the project each year during the period calculated the present value of net cash flow and investment and the present value of the difference between the It reflects the cash flows in the form of investment income and investment relationship: when the net present value greater than zero means that investment income is greater than the investment, the project has the desirability, when the net present value is less than zero, which means investment income less investment, not with the desirability of the project. NPV calculation is the actual cash flow calculation and the time value calculation. NPV discount rate depends on the size, its meaning also depends on the discount rate requirement is: If the cost of capital investment projects as the discount rate, the net present value calculated by the present value of the full benefits of the project (the loss, if the opportunity cost of investment as the discount rate, the net present value represents the present value terms, the project has given the program more than the gains, if the industry average capital gains rate as the discount rate, the net present value calculated by the present value of the project more than the industry average level of income obtained income. practice, according to different stages of different discount rates, the construction of the project's cash flow during the loan interest rate as the discount rate, while the operational period of the cash flow of funds according to the average social rate of return as the discount rate , sub-calculation. NPV is net present value and the actual rate the present value of investment compared to the form to reflect the present value of investment income and investment relationship between the contrast, which to some extent make up for the net present value of the investment is not while not correct the shortcomings of decision-making. profitability index is based on the relative number of forms each year during the project calculated the present value of net cash flows and present value to compare with the investment, and net present value is based on the absolute form of the period of the project within the annual net cash flows to present value and compared with the present value of investment based on financial analysis point of view, taking into account the time value of project investment and associated risk factors evaluation has been able to better reflect the investment value of a project, in practical application, financial analysis often encounter more problems, Links to free download http://www.hi138.com
(Two indicators of investment decisions using financial evaluation of investment projects, the status quo at the national conditions of the existing tax system and price system, the calculation of the project within the scope of benefits and expense, to analyze project profitability, liquidity, in order to examine the project in financial feasibility. At present, the government and enterprises in the financial evaluation of investment projects, mainly based on the State Planning Commission and the Ministry of Construction jointly issued by the <<Project Economic Evaluation Methods and Parameters>> With the Economic Development of the situation, investment environment has significant changes in the financial evaluation system in use in the process gradually exposed more deficiencies.

First, the dynamic calculation of discounted indicators exist open to question. Financial evaluation of the dynamic indicators of leaving because of the use of discounted technical project financial evaluation more scientific, but in the calculation of net present value of the project, often assumed that the project's future cash flows in the period of the project occurred at the beginning or end, making deviation from the expected future cash flows due to under normal circumstances, a used and dropped into the normal operation of the project's future cash flows are affected by many factors working together, not just in occur early or late, but will always occur, occur from time to time the occurrence of cash flow to assume the present value calculation point, is biased. period of the project's discount rate should be the cost of capital and investment projects to adapt to As long as the net present value calculation is greater than zero, the program should be feasible in theory, but China's investment period of the project's discount rate by the State Planning Commission and the Ministry of Construction national organization determination, publish and regularly adjusted, and the investment project itself divorced from the cost of capital, resulting in short-term decision-making.

Then, the lack of systematic investment risk analysis. Is a profit-driven activities, investment activities, the risks and benefits were the same to the changes, many good items in financial income risk may be due to too large and not feasible, that the proposed investment project uncertainty of profitability, liquidity, foreign exchange effects have a significant impact, while the original investment project feasibility analysis of investment projects will be analyzed independent of the uncertainty of profitability analysis, liquidity analysis, foreign exchange effects analysis, the its decision on the feasibility of investment projects, the importance of greatly reduced. the financial evaluation in the evaluation of the project has its unique role, but sometimes depending on the evaluation will draw very different conclusions on investment should be an investment in which indicators The main choice criteria, which indicators for the secondary standard, the financial indicators of the viability standard is how much the current evaluation system did not give a guiding standard.

Finally, the lack of investment project environmental impact evaluation. The original investment project feasibility analysis of investment in environmental impact assessment is limited to qualitative assessment, not quantitative aspects of basic, but many investment projects will inevitably have around ecology, resources, people produce a series of home and other negative effects, such as water pollution, destruction of vegetation, farmland, etc. Therefore, the environmental impact of investment projects should not only qualitative, but also cost, expense, gains and other forms will be incorporated into the environmental impact of the investment financial evaluation in the past.

In summary, the project investment decision evaluation will contribute to the specification of China's capital investment, and promote the optimal allocation of limited resources, China's economic growth have a positive impact, but due to financial evaluation of investment projects in the process of measuring where there are more imperfect, hindering the realization of investors, optimal allocation of resources is not conducive to the sustainability of China's economic development from the institutional factors and indicators for specific investment decisions using the starting index of the project can effectively reverse the current optimal negative situation.

Third, project investment evaluation of the optimal path of discounted financial indicators combined with simple financial indicators to effectively evaluate the feasibility of the project, but in practice limited due to various problems, indicators of the evaluation function by certain limitations, can further optimization of the following financial evaluation of the project investment decision content and methods.

(A positive innovation, optimizing the dynamic index is calculated taking into account the original calculation of the dynamic indicators of the drawbacks, the use of dynamic indicators of improvements in the feasibility conditions, the project calculate the discounted net cash flows during the period to make may be shortened, so that discounted cash flow close to the actual situation. to adjustment based on cost of capital discount rate, using the weighted average cost of capital method to determine the project's cost of capital, according to the size of project risk adjusted discount rate to optimize production period cash flow estimation methods, the traditional financial analysis of investment projects generally use equal cash flow model cash flow analysis, but actually put into production phase of the project's cash flow can not be equal, therefore, should affect the cash flow of the main factors considered a system with a system point of view of investment projects to guess future net cash flows. Links to free download http://www.hi138.com
(Two risk factors to ensure the project runs through the financial analysis is always the risk assessment process under the discounted cost of the basic factors will be cast into the project risk analysis, project profitability analysis, liquidity analysis and foreign exchange effects analysis to improve project evaluation of the authenticity and reliability in the analysis of profitability, the expected revenue and expected to use instead of the anticipated revenue and anticipated expense expense, considering the investment projects, market risk, sales risk and production risk, calculate the project's operating leverage factor in the liquidity analysis, calculate the project's financial risk in the foreign exchange effect analysis, project management to consider the risk of exchange rate changes during the period. After such improvement, the index value is fully taken into account the impact of various uncertainties can be more truly reflect the project's financial viability.

(C grasp important factor influencing factors appropriate indicators to increase business investment by many factors, the economic benefits and costs of investment projects to consider only the current evaluation of important aspects of speed up the accounting elements of the green accounting recognition, measurement , show the method, measurement of the fair recognition of the environment caused by environmental factors, assets, liabilities, equity, cost, revenue and profits, such as, and was incorporated into the measurement results for the financial evaluation, according to the projected financial statements, analysis of the project profitability and liquidity, and the continued viability of the project evaluation.

(D to expand the scope of attention, increasing the project's development capacity analysis of the original financial evaluation focuses on the viability of the project analysis, in the fierce competitive environment, project development capacity analysis will become more important the project is only a short-term profitability of a project performance , investors should be concerned about the overall future of the project life cycle, the project's sustainable development ability and industrial capacity to be concerned, therefore, necessary to add in the original evaluation system project development capacity analysis.

(E to develop systems thinking, integration of various evaluation indicators in the current evaluation system has a number of analytical indicators, leading enterprises in the application process does not know which one to focus on. Enterprises in the financial indicators based on the evaluation of the importance of the The index set of a certain weight, by national or regional government based in part on the changing situation on the index weight for regular or irregular updates, and to develop a realistic target weight assessment methods and more standard, quantitative evaluation results by the combined result can be more clearly reflect the project's overall situation.

Index calculated by the use of level optimization process and can effectively improve the project evaluation process of current problems. Economic development is a dynamic process, investment environment with economic development will become increasingly complex, the project investment analysis and improvement of decision-making system is also a need to continue to study long-term process.


References:
[1] Lin Feng Yan: Investment project financial evaluation to the construction, <<technical and economic>>, 2007, No. 2 (ed. Duchang Links to free download http://www.hi138.com