Application of a metd of NPV demands some specification as NPV is the indicator only of positive pure currents of real money or true benefits on the project. If there are two or more alternatives, it is expedient to define, what sum of investments will be required for creation of these positive NP the Ratio of NPV and the demanded discounted cost of investments (NPI) is called as coefficient of the net discounted income (PI) or a profitability index which gives the discounted rate of return. This ratio has to be used for comparison of alternative projects. The formula has an appearance:
In MR it is told that "the choice of projects cannot is carried out on the basis of one - a chip it is necessary difficult - formal criterion". However, what to do if one of criteria conflicts to another? "If comparison of the alternative (mutually excluded) investment projects (options the project on IRR and NPV is led to opposite results, the preference should be given NPV" (9, page 1 and if not mutually exclusive projects are considered, but a portfolio, - about it it is not told.
Thus, if n of independent projects is set, selection for financing is made as follows: various combinations of projects are formed (them will be 2n-1, to be exact 2n as such option is possible that any of projects will not satisfy to restriction, and mathematics exact sciences. And further we select such projects, for which:
NPV method shortcomings - complexity of a choice of the corresponding norm of discount and that NPV does not show exact profitability of the project. For this reason of NPV the businessmen who got used to think of categories of rate of return on the capital not always understand. Therefore it is recommended to use an indicator of internal standard of profitability.
It is interesting that means of guarantee funds can be formed both at the expense of money, and at the expense of securities, and at further development of the market of real estate as property of guarantee fund can act reflected by municipalities of real estate at its estimated cost. It is undoubtedly important as for such purposes executive power has no cash. Especially actually it for regions.
Some authors claim that in the conditions of inflation the payback period is the main criterion of efficiency of investments. G. claims that this statement is not correct as this criterion actually is not connected with the fixed purpose - receiving profit, and the indicator of NPV includes at calculation the discount rate which is already considering a rate of inflation (26, page. Really, the project with a small payback period can have smaller NPV, than the project with long terms of conducting installation and construction works and gradual accumulation of volumes of production for a certain term of calculation.
In works of various authors it is offered to use the IRR method for OEIP and to compare it to the standard of the income demanded by the investor on the capital, norm of discount, capital cost + an extra charge for risk, etc.
Small Business Administration - the organization which task is support of small business in the USA (analog of Federal fund of support small businesses. SBA offers the whole software package, directed on financing and guaranteeing loans of small business to the USA:
Research of key concept of a subject of the present Thesis ("small business") which need is shown in Introduction, revealed that small business is the sector of economy which is characterized by small-scale production. Owing to limited resources (raw, financial, labor) this sector is most subject to influences of environment, however therefore the small enterprise is the most mobile the dimensional managing unit not demanding bulky administrative systems. Between the head (owner) and the worker there are no intermediaries, that is the manager-owner has to be the universal expert (the administrator, the marketing specialist, to operate production and sale) and thus to combine functions of the owner. It follows from this that that small business is also special type of business activity.
- check on the basis of own analysis and own calculations of the final conclusions and quantitative indices characterizing viability of the project (the net specified value, internal profitability of investments, a payback period, etc.);