METHODS FOR EVALUATING THE ECONOMIC EFFICIENCY OF INVESTMENT PROJECTS AND MODERN APPROACHES TO THEIR APPLICATION
Keywords:
investment project, economic efficiency, NPV, IRR, PI, PP, DPP, MIRR, discount rate, WACC, risk, sensitivity analysis, Monte Carlo simulation, real options.Abstract
This article examines the theoretical and methodological foundations of traditional and modern methods used to evaluate the economic efficiency of investment projects. The economic substance, calculation mechanisms, advantages, and limitations of Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), Payback Period (PP), Discounted Payback Period (DPP), Accounting Rate of Return (ARR), and Modified Internal Rate of Return (MIRR) are systematized.
The study substantiates that evaluating investment projects on the basis of a single financial criterion is insufficient in the contemporary economic environment. It demonstrates the need to jointly consider the cost of capital, inflation, risk and uncertainty, cash-flow volatility, managerial flexibility, and strategic factors when assessing project efficiency. A methodological approach is developed in which NPV is used as the core criterion and is integrated with IRR, MIRR, PI, DPP, sensitivity analysis, scenario analysis, Monte Carlo simulation, and real-options analysis.
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