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Title: A systematic approach for the analysis of the economic viability of investment projects

Authors: José Donizetti De Lima; Marcelo Gonçalves Trentin; Gilson Adamczuk Oliveira; Dayse Regina Batistus; Dalmarino Setti

Addresses: Department of Mathematics, Federal University of Technology, Paraná, Campus Pato Branco, Brazil, Pato Branco 85.503-390, Brazil ' Department of Electrical Engineering, Federal University of Technology, Paraná, Campus Pato Branco, Brazil, Pato Branco 85.503-390, Brazil ' Department of Mechanical Engineering, Federal University of Technology, Paraná, Campus Pato Branco, Brazil, 85.503-390, Pato Branco, Brazil ' Department of Mathematics, Federal University of Technology, Paraná, Campus Pato Branco, Brazil, Pato Branco 85.503-390, Brazil ' Department of Mechanical Engineering, Federal University of Technology, Paraná, Campus Pato Branco, Brazil, Pato Branco 85.503-390, Brazil

Abstract: This paper aims to present a systematic for the analysis of the economic viability of investment projects (SAEVIP) in fixed assets. In the literature, it is possible to identify the fundamental elements to evaluate the merit of the investment project (IP). To assess the dimension 'return', indicators are analysed: net present value (NPV), NPV annualised (NPVA), index benefit/cost (IBC), return on investment annualised (ROIA), index ROIA/minimum rate of attractiveness (MRA) and return on investment (ROI). An indicator analysis for dimension 'risk' is performed by internal rate of return (IRR), Payback, index MRA/IRR, index Payback/N and Fisher point. In addition, a joint assessment of indicator of risk and return is performed. A sensitivity study is promoted on the main variables involved in economic performance of the IP (MRA, costs and revenues). To validate the SAEVIP proposal, a case study shows the wealth of information generated by the application of this systematic.

Keywords: decision making; investment projects; project viability; economic viability; fixed assets; economic analysis; sensitivity analysis; project costs; project revenues; discounted cash flow; DCF; multi-index methodology; project returns; project risks; production verticalisation; project planning; product development.

DOI: 10.1504/IJEME.2015.069887

International Journal of Engineering Management and Economics, 2015 Vol.5 No.1/2, pp.19 - 34

Received: 17 Sep 2014
Accepted: 09 Dec 2014

Published online: 15 Jun 2015 *

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