lesson1
THE CONCEPT AND GENERAL
CHARACTERISTICS OF INVESTMENT
THE PURPOUSE OF A LESSON
The purpouse of the lecture is to define
the concept of investment and the
classification of investments according
to various criteria
DEFINITION OF INVESTMENT
Investment as
a process of putting assets into any
action to make a profit in the future
a monetary asset purchased with the
idea that the asset will provide income
in the future or will later be sold at a
higher price for a profit.
DIFFERENT TYPES OF RUN OF PROCESS OF INSERTING
ASSETS AND RECEIVING PROFITS
Consistent Assets putting in
Profit getting
Parallel Assets putting in
Profit getting
Interval Assets putting in
Profit getting
FORM OF INVESTMENT
Money
Physical capital
Goods
Other investment assets
THE DIFFERENCE BETWEEN INVESTMENT AND
CONSUMPTION EXPENDITURE
The investment objective is a obtain of profits
The objective of consumption expenditure is
an appeasing of needs
THE FACTORS THAT EFFECT ON AN INVESTMENT
The inflation rate
The interest rate
The part of the savings-income
households
The profit rate
THE RELATION BETWEEN FACTORS AND
INVESTMENT ACTIVITIES
Investment Investment
In the event of high inflation, we must At a high interest rate, the cost of obtaining
external
cover not only the investment costs but financing sources (for example, a bank loan)
also losses caused by the decline increases. we must cover not only
in the purchasing power of money the investment costs but also the
costs
of using external sources
inflation rate interest rate
Investment Investment
When households increase The increase of the profit rate
the share of savings in their stimulates an investment activities
income, the amount
of capital allocated
for investing increases
the part of saving in income Profit rate
INVESTMENT CRITERIA
a time: short-run and long-run
investments
a type of investor participation : direct
and indirect investments
a form of ownership : private, state,
foreign, joint investments
an inserting an object costs : real and
financial investments
FEATURES OF INVESTMENT
Safety of Principal
Adequate liquidity and collateral
value
Stability of income
Capital growth
Tax Benefits
Purchasing power stability
Concealability
PERCEPTIONS OF INVESTMENT
Financial Perception
Economic Perception
Social Perception
CATEGORISATION DIFFERENT TYPES OF INVESTMENT ACTIVITIES
Diversification – appraising the
soundness of investment into new
products/services.
CATEGORISATION DIFFERENT TYPES OF
INVESTMENT ACTIVITIES
Cost saving – some investment
activities are expected to result in cost
savings
(for example, the office automation),
and such decisions need appraisal just
as diversification and expansion of
product lines
.
CATEGORISATION DIFFERENT TYPES OF
INVESTMENT ACTIVITIES
Replacement – not all investment
decisions result in net additions to the
capital stock, so deciding whether and
when to replace existing capital
(equipment and building) constitutes
another type of consideration in
investment appraisal.
CATEGORISATION DIFFERENT TYPES OF
INVESTMENT ACTIVITIES
Research and Development – this can
affect enterprise productivity,
competitive position and, ultimately,
financial performance. These activities,
too, need appropriate assessment
before resources are devoted to them.
CATEGORISATION DIFFERENT TYPES OF
INVESTMENT ACTIVITIES
Alternative choice – this type of
investment decision requires choosing
between alternatives that achieve the
same ends (e.g. purchasing
‘outsourced’ inputs from an external
supplier or else producing the good or
service in-house).
CATEGORISATION DIFFERENT TYPES OF
INVESTMENT ACTIVITIES
Financing – comparison of the benefits
of purchasing an asset against leasing
it.
CATEGORISATION DIFFERENT TYPES OF
INVESTMENT ACTIVITIES
Others – such as expenditure on
complying with health and safety
standards, a pollution control device,
etc.
TYPES OF CAPITAL INVESTMENT PROJECTS
New Products or New Markets
Expansion of Existing Products or
Markets
Replacement Project Necessary to
Continue Normal Operations
Replacement Project Necessary to
Reduce Business Costs
DEFINITION OF MANAGEMENT
Management is a system of methods,
techniques, ways to impact on the resources
of the organization for ensuring of achieving
the established objectives.
REFERENCES
K.Kogon, S.Blackmore, J.Wood. Project
Management for the Unofficial Project
Manager. BenBella Books , 7th Edition,
2015, ISBN194163110X.
E.Verzuh. (2015),The Fast Forward MBA
in project management. J.Wiley & Son3,
528 s. ISBN: 9781119086574
