Evaluation of risks and efficiency of the investment project
Students Name: Mykytyn Roksolana Bohdanivna
Qualification Level: magister
Speciality: Enterprise Economics
Institute: Institute of Economics and Management
Mode of Study: part
Academic Year: 2020-2021 н.р.
Language of Defence: ukrainian
Abstract: Mykytyn R. B., Skvortsov I.B. (supervisor). Evaluation of risks and efficiency of the investment project. Master’s thesis. – Lviv Polytechnic National University, Lviv, 2020. Extended abstract Given the severe limited financial and investment funds, a comprehensive study of the effectiveness of approved investment management decisions is of particular importance. In modern conditions, businesses are forced to make significant adjustments to the methodological tools and scientific content of the evaluation of the effectiveness of investment projects, due primarily to the high degree of uncertainty that accompanies the investment decision-making process. In this regard, the issue of risk taking into account when assessing the effectiveness of investment projects needs to be especially relevant [1]. Risk is always an integral part of any activity, even in the most favorable economic conditions there will be a possibility of non-fulfillment of the planned income or a negative scenario of direct losses. The risk analysis is as follows: to provide potential partners with reliable information in order to make decisions on the appropriateness of participation in the project and to anticipate measures to protect against potential financial losses. In accordance with the topic of my work, I conducted a study of theoretical aspects of risk assessment of investment activities. In particular, I have generalized approaches to the interpretation of the concept of "risk" in scientific sources. The study showed that the vast majority of scientists identify risk with a certain event, possibility or probability of occurrence of events, which leads to a greater negative impact (loss of profit, additional unforeseen losses, etc.). But there is another category of scientists who see a positive effect from the onset of risks (additional income or profit, success, happy outcome) [2]. The subject of research of my master’s work was LLC "POLYMER". LLC "Polymer" - an enterprise that is the undisputed leader in the western region of polymer products. The production and technological capacities of the plant allow to produce up to 300,000 kg of products per month. The main clients of the Polymer LLC company are retail trade networks and shops, separate production enterprises, the postal companies performing freight transportations. The analysis conducted in section 2 showed that our company has satisfactory financial stability, which is evidence of its effective financial and economic activities and ability to ensure continuous production and marketing processes. To form a strategy for the development of the enterprise, a SWOT study was conducted. Based on this, the final development strategy is formulated, which is to attract investment funds for the implementation of priority investment projects. In the third section of the master’s thesis I conducted a study of the market of polymer products. These data show that the market for polymer products is already segmented in certain areas and has a positive growth trend in the future. In addition, I have proposed a method of evaluating the effectiveness of the investment project taking into account risk factors. The sequence of its implementation is as follows: risk management planning, risk identification, qualitative risk assessment, quantitative risk assessment, risk response planning, risk monitoring and control [3]. The master’s thesis substantiates the implementation of the investment project of LLC "POLYMER", which consists in the purchase of new equipment for casting plastic products - thermoplastic machine DE 3132-Ts1 worth 430 thousand UAH. Country of origin - Ukraine. The price includes the cost of delivery and installation and adjustment of equipment. Let’s evaluate the effectiveness of the investment project taking into account the risk using the methodological approach proposed by us in section 3. The list of risk factors of the investment project for the purchase of automatic molding machine equipment is given in the paper. In general, 10 risk factors at 3 levels of influence on the company are specified. Identification of the degree of impact of existing risks on the investment project of LLC "POLYMER" is to develop a matrix of weighting risk factors of the investment project and ranking of risk factors. According to the rank, we have substantiated the recommended measures to minimize the risks of the investment project of purchasing equipment by the enterprise. Calculation of project efficiency in accordance with the probabilistic options for its implementation, where the values of net present value for different options for the implementation of the investment project are calculated. Calculations also showed that the payback period of the investment project for the purchase of equipment is 3 years and 10 months. The initial investment will amount to UAH 430 thousand, and the net present value of the implementation of this project for four years will amount to UAH 13.89 thousand. The obtained results indicate a significant riskiness of the investment project for the purchase of equipment DE 3132-Ts1, so it is important to take these results into account in the final management decision on investment. Study object – risk calculation and efficiency of POLYMER LLC. Scope of research – the process of preparing an investment project for the regulation of polymer products. Goal of research: research of approaches to risk assessment and economic efficiency of investment projects. Key words: risk, project risk, efficiency, economic efficiency, investment project. References 1. Feshchur, R., Kuzmin, O., Skybinskyi, O., & Ugolkova, O. (2017). State and prospects of crowdfunding development. Financial and credit activity-problems of theory and practice, 2 (23), 414-423. 2. Feshchur, R., Tymoshchuk, M., & Kopytko, S. (2018). Management of social and economic stakeholders engagement in business environment. Financial and credit activity-problems of theory and practice, 1 (24), 469-477. 3. Feshchur, R., Tymoshchuk, M., Shyshkovskyi, S., & Kopytko, S. (2018). Formation of indicators system of evaluation of enterprises activity as process of their interaction with interested parties. Financial and credit activity-problems of theory and practice, 4 (27), 318-327.