Firms take into account when making investment decisions. Interest rate and rate (level)

(TNK). Figuratively speaking, the process of formation of environmental consciousness is taking place. The same is true in financial circles, where a growing number of large banks and financial services companies are incorporating environmental concerns into their investment decisions. This circumstance is especially important for enterprises in countries with economies in transition, which are trying to get support from Western partners and investors and provide more attractive conditions for cooperation with them/  

The amount of investment depends on an estimate of the future marginal productivity of capital, and so far we have considered this factor as something given, arising from the production function. In practice, investment decisions are fraught with uncertainty. There are millions of different goods, and the marginal product of capital in the production of any of them depends on the future demand for the product (demand also determines the price of the product in the future). The marginal product of capital also depends on countless uncertain circumstances, technological and other factors affecting the production process. This uncertainty is compounded by the fact that before making an investment decision, it is necessary to assess the business environment for many years to come, and not just for the immediate period.  

For investors, making investment decisions is of particular importance. Given this, the crucial point is the effective selection of investment proposals. Ensuring that a business uses appropriate valuation techniques is an important part of this process. Research shows that companies around the world use four methods to evaluate investment opportunities in practice. This  

In the examples discussed, the controller proposes a business case methodology that creates a certain framework or sets a path in the decision-making process. When it came to justifying investments, it was the discounted cash flow (DCF) method, in other tasks - the coverage amount method. It should be noted that in the DCF method there are also elements corresponding to the structure of coverage calculations. So, the payback period is a kind of critical point, i.e. the time that must pass before the amount invested is returned through cash flows.  

At the first (preparatory) stage - the stage of making a decision on investment - within the framework of its first phase, investment goals are formed, in the second phase the direction of investment is determined, and in the third phase, specific objects for investment are selected, an investment agreement is prepared and concluded, which defines the rights and responsibilities of the parties to the agreement regarding the amount of invested funds, the timing and procedure of investments, the interaction of the parties during the implementation of the investment process, the procedure for using the investment object, ownership relations for the created investment object, the distribution of future income from the operation of the object, etc. By signing an investment agreement, the invested material and intangible benefits are given the status of investments.  

The categories of risk and return form the core of modern risk management concepts. The inevitability of risk in the pursuit of ultra-high incomes is taken into account when planning the creation and development of an enterprise in business plans. For example, when conducting marketing research, they take into account the possibility of experiencing losses when demand falls and prices for products and resources change - business risk. In planning and organizing production processes, the risk of reduced profitability is taken into account, setting a certain level of efficiency in the use of resources and, accordingly, the level of current costs and arrived. When making decisions on investments and financing, the risk of loss of financial stability and liquidity is taken into account. In the process of monitoring a business plan, the realized and accepted level of risk is controlled when organizing and coordinating the activities of departments and performers. Managers' remuneration should accordingly depend on their ability to anticipate developments and make effective decisions in the face of increased risk.  

Risk business is the most effective form of organizing investment processes. But from the point of view of an industrial enterprise, it has a major drawback: it involves too high a degree of business risk. In addition, a review of the investment practices of enterprises showed that there are no standard investment decisions and each investment process, as a rule, requires a special approach. Therefore, it is legitimate to talk not so much about specific forms and methods of organizing investments, but about the general principles of making strategic decisions on capital investments in the industrial sector.  

Establishing investment priorities and directing corporate resources to the most attractive types of business. The different types of businesses that make up a diversified company usually do not have the same attractiveness from the point of view of investing additional funds. This part of the strategy process involves deciding on priorities, i.e. about investing more capital in some types of business and about directing resources to those areas where the potential for profit is higher, and about withdrawing resources from those areas where it is lower. Corporate strategy may include divesting business units that have chronically underperformed or operate in increasingly unattractive industries. This divestment frees up unproductively used investments to invest in more promising businesses or to finance attractive new acquisitions.  

Finally, we have seen that investment evaluation methods and criteria are only one aspect of the investment process, and that other aspects, such as finding suitable projects, monitoring and controlling projects, are vital to making effective investment decisions.  

Applied to

Investments are financial investments in promising projects.

Investors are usually representatives of large businesses who have available financial resources that can be used to implement new financial projects. The procedure for approving a certain idea regarding investing money ends with the adoption of an investment decision, on the correctness of which the success of the entire business depends.

Concept

Aspects taken into account when making an investment decision:

• The prospects of the invested object, as well as the amount of profit that the implementation of the project can bring; here it is important to calculate market trends and analyze its development for several years in advance.
• Opportunities for the investor to develop the enterprise: opening new directions, recruiting and training personnel, improving material and technical equipment.
• The presence of potential competitors in the market and the ability to withstand competition in the future.
• The ability to optimize the production process, introduce new technologies and scientific inventions.

Investment decisions must meet the following requirements:

• efficiency, which is directly determined by the amount of profit (income), which should exceed the amount of money invested;
• justification taking into account discounting;
• profitability, which according to calculations should exceed the inflation rate;
• optimal risks, calculated taking into account all objective and subjective factors that may affect the implementation of the investment decision.

Types of investment decisions

• For expansion and development of the enterprise.
• In order to reduce costs.
• For the acquisition of new assets (tangible/intangible).
• Improving working conditions.
• To explore a new market.

Fill the table. Let the wage rate in a given period of time be 70 den. units How many workers will the firm hire? How many workers will the firm hire if the wage rate increases by 150 den. units

6 The company is a monopsony in the labor market and a monopoly in the product market. Based on the available data, determine how many workers this company will hire and what wage rate it will set:

If the nominal interest rate is 10% and the inflation rate is set at 4% per year, then the real interest rate is:

A. 14%; B. 6%; B. 2.5%; G. –6%; D. 4%.

The equilibrium interest rate equalizes:

A. Nominal and real interest rates.

B. The volume of demand and supply of borrowed funds.

B. Consumption and saving. D. All specified values.

D. Neither situation occurs.

When making investment decisions, firms take into account:

A. Nominal interest rate. B. The real interest rate.

B. The nominal interest rate minus the real interest rate.

D. Other quantities not specified here.

D. The real interest rate minus the nominal interest rate.

4. A positive decision on the construction of a bridge that will serve for 200 years and bring an annual profit of 10% will be made provided that the interest rate is:

A. No more than 2%; B. No more than 20%;

B. 10% or less; D. 10% or more.

D. There is no information to make a decision.

5. Bringing income paid after a certain period to today’s period, at the existing interest rate, is:

A. Discounting. B. Inflation.

B. Deflation. D. Indexation.

Task

The total income of the enterprise is 600 thousand monetary units. The company pays employees wages - 300 thousand monetary units. In addition, the cost of raw materials and supplies amounts to 100 thousand monetary units. Implicit costs of the enterprise amount to 150 thousand monetary units. Task: determine the accounting and economic profit of the enterprise.

3. Determine whether the following statements are true (B) or false (F):

1. Differential rent is the difference between the payment for a unit of attracted resources and the minimum at which this unit can be supplied on the resource market.

2. Capitalized is the total value of all future rental payments that the land plot is expected to be able to bring.

3. Investment in human capital is any action that improves skills and abilities, or in other words, labor productivity.

Task

The table provides basic information about the firm's production when hiring a variable amount of labor and a fixed amount of capital. Fill out table 1. Using the data obtained, fill in the column of the company's demand for labor in table 2.

Table 1.

Table 2.

OPTION 11.

Abstract topic:

"Organizational forms of entrepreneurship in a market economy"

Sample plan:

1. Organizational and legal forms of entrepreneurship.

2. Specifics of organizational forms of entrepreneurship in the Russian economy.

3. Current issues in the development of joint entrepreneurship in Russia.

Test:

1. Choose the correct answer:

1. Nominal GDP is measured in:

A. Current market prices. B. Basic (fixed) prices.

B. World prices. D. All answers are incorrect.

2. The GDP deflator is calculated as the ratio:

A. Real GDP to nominal.

B. Nominal to nominal GDP.

B. Nominal GDP to real.

D. All answers are incorrect.

3. NVP is GDP reduced by the amount:

A. Indirect taxes. B. Depreciation.

B. Gross domestic private investment.

D. All answers are correct.

4. If the volume of nominal GDP and the price level increased by the same amount, then real GDP:

A. Grew up. B. Shrunk. V. Has not changed. D. All answers are incorrect.

5. Goods purchased for further processing are:

A. Final goods. B. Durable goods.

B. Intermediate goods. D. Means of production.

6. Gross domestic private investment is taken into account when calculating:

A. GDP by income. B. GDP by expenditure.

V. PVP. D. All answers are incorrect.

7. The ratio of the price of the “market basket” in the current year to the price of the same “market basket” in the base year is:

A. GDP deflator. B. Price index.

B. Interest rate. D. Double counting.

8. Calculation of real GDP does not involve taking into account the influence...

A. Changes in intermediate products.

B. Changes in the price level. B. Inflation.

D. Changes in nominal GDP.

9. Republic “W” had nominal GDP in the base year of 3000 million units. and the next year increased by 300 million units. If the GDP deflator was 1.2, then...

A. Nominal GDP increased by 10%, real GDP decreased by 8.3%.

B. Nominal GDP increased by 10%, real GDP increased by 2%.

B. Nominal GDP increased by 20%, real GDP increased by 12%.

D. Nominal GDP decreased by 10%, real GDP remained unchanged.

10. Fill in the blank. If net exports decrease by 10 billion den. units, and personal consumer spending will increase by 20 billion. units all other things being equal, then the volume of GDP ____________ billion. units

A. Will increase by 30. B. Will decrease by 10.

B. Will increase by 10. D. Will decrease by 30.

1) Part of economic theory that studies the patterns of functioning and trends in the development of the country’s economy as a whole from the point of view of ensuring conditions for sustainable economic growth, full employment of resources, minimizing the level of inflation and achieving general macroeconomic equilibrium. The total market value of all final goods and services produced in a country during the year.

2) The total quantity of goods and services that producers can offer at a given price level.

3) A set of economic units that are the owners of economic resources, make decisions independently, form demand in the market for consumer goods and services, act on the supply side in the market for factors of production, and strive for maximum satisfaction of their needs.

4) The horizontal segment of the aggregate supply curve at which the price level remains constant when the volume of real GDP changes.

5) Many economic units that use factors of production to create material goods for the purpose of selling them, make decisions independently, act on the demand side in the market for factors of production, form market supply in the market for goods and services, and strive to maximize profits.

6) The constantly repeated and renewed process in society of production, distribution, exchange and consumption of material goods and services.

7) Division and correlation of the main parts of products produced in the economy, depending on their functional purpose.

8) The total volume of goods and services that are in demand in the economy at each given value of the price level.

9) The existing distribution of economic resources in society between industries and spheres of material production.

10) A set of internationally recognized rules for accounting for economic activity, reflecting all the main macroeconomic relationships.

Task

The table presents data on labor resources and employment in the first and fifth years of the period under review, in thousand people.

Define:

The number of unemployed and the unemployment rate in the first and fifth years of the period under review.

Can it be said that full employment existed for the fifth year of the period under review?

OPTION 12.

Abstract topic:

“Small enterprises and problems of small business development in the Russian economy”

Sample plan:

1. The objective necessity of the existence of small enterprises in a market economy.

2. The role of small business in a market economy: the experience of developed countries.

3. Problems and prospects for the development of small business in the Russian economy.

Test:

1) The unemployment rate is determined by comparing the total number of employed and unemployed.

2) The model of the circulation of resources, products and income is simplified and therefore does not reflect even the basic economic processes and relationships that take place in the real economy.

3) The natural rate of unemployment is the level of unemployment in the absence of a cyclical form of unemployment.

4) The reproduction structure reflects the division and correlation of the main parts of products produced in the economy, depending on their functional purpose.

5) Structural unemployment is unemployment associated with a voluntary change of place of work by employees or periods of temporary layoff.

6) The second division of social production produces means of production.

7) Frictional unemployment is unemployment caused by a discrepancy between the professional training of the workforce and the structure of production.

8) In the modern economy, the sphere of material production includes the production of material and intangible goods.

9) Inflation is the general increase in production.

10) With an annual 10th increase in prices, their level doubles every 10 years.

11) In a post-industrial economic system, the service sector includes the production of tangible and intangible services.

12) With an annual 5% reduction in prices, the real income of families with a solid income increases by 5% per year.

13) The sectoral structure of the national economy reflects the share of individual commodity producers in the production of products created in society.

14) Unforeseen inflation can lead to a redistribution of income between the debtor and the creditor in favor of the former.

15) Recovery is a phase of the economic cycle characterized by full employment and full use of resources.

2. For each of the provisions below, find the corresponding term or concept:

1) The ascending segment of the aggregate supply curve, located between its Keynesian and classical segments.

2) The vertical segment of the aggregate supply curve corresponding to the position of the economy at full employment.

3) A 1% excess of the current unemployment rate over the unemployment level at full employment is equal to a 2.5% lag in the real volume of NNP from the potential NNP.

4) The unemployment rate in the absence of a cyclical form of unemployment.

5) All persons who can and want to work.

Task

GDP is equal to CU 1500. Consumer spending = CU 700, government spending = CU 400, gross domestic private investment = CU 380.

Define:

Net export volume;

PVP, provided that the amount of depreciation is 70 units,

The volume of exports, provided that imports are 80 units,

In this example, net exports are expressed as positive. Can it be negative? In which case?

OPTION 13.

Abstract topic:

“Price in a market economy system”

Sample plan:

1. Economic nature and functions of price.

2. Pricing marketing strategies.

3. Pricing practice in developed countries and its significance for the Russian economy.

Test:

1) The SNA entered into Russian practice of accounting for basic macroeconomic facts and trends in 2000.

2) The system of national accounts is a set of internationally recognized rules for accounting for economic activity, reflecting all the main macroeconomic relationships.

3) The term “national accounting” was proposed by J. Keynes.

4) In the SNA, financial corporations and households belong to the real sector of the economy.

5) In the SNA, institutional units that, in addition to performing their political functions and functions of regulating the economy, are engaged in the production of non-market goods and services for individual or collective consumption and the redistribution of income, constitute the government sector of the economy.

6) The value of net exports is equal to the sum of exports of goods and services and the volume of imports of a given country.

7) GDP is the total market value of all final goods and services produced in the country during the year.

8) The final product is goods and services purchased for final use, and not for further processing, processing or resale.

9) Net exports are gross investments minus depreciation charges.

10) The income stream method of calculating GDP involves summing up all income received from the production of the entire volume of output for a given year.

11) Real GDP is the value of goods and services produced in a year and measured at current prices.

12) If actual GDP is equal to potential GDP, this means that the economy is developing at full employment.

13) The economic cycle is the ups and downs of business activity repeated over a number of years.

14) Investment in machinery and equipment usually does not increase before the onset of an economic crisis.

15) A recession is a phase of the economic cycle in which the economic system approaches its lowest level compared to the full employment level of GDP.

16) If the unemployment rate is equal to the natural rate, then the volumes of potential and actual GDP are equal.

17) The aggregate demand curve has a negative slope.

18) The flexibility of prices and their tendency to decrease is determined by the ratchet effect.

19) The wealth effect is a non-price factor that determines the dynamics of aggregate demand.

20) A decrease in aggregate demand is the result of the effect of interest rates, import purchases and real cash balances.

Task

Determine the status of the persons listed below in terms of their relationship to employment and the labor force if they are classified as follows: employed (Z), unemployed (B), not included in the labor force (N).

An employee dismissed at his own request.

An employee transferred to part-time work.

A teacher who, due to health reasons, can no longer work.

A laid-off worker who has been unable to find work for a long time and has therefore stopped looking for one.

A student who is a full-time student at an educational institution.

An auto mechanic who studies in the evening department of an educational institution.

A housewife who cares only about her home and family.

She is a housewife who works part of the time as a librarian.

Task

Suppose that in the first year total production in the hypothetical economy consisted of 4 units of good X at a price of 3 units; 1st piece of product Y at a price of 12 units; 3 pieces of product Z at a price of 5 units. Let us assume that by the third year the prices for these goods have reached the following level: product X - 5 units, product Y - 10 units, product Z - 10 units. Determine the GDP price index for the first year using the third year as a base year.

OPTION 14.

Abstract topic:

“Features of pricing for production factors”

Sample plan:

1. Supply and demand in the factor of production market.

2. Features of pricing in factor markets:

A) labor market;

B) capital market;

B) land market.

3. State policy in the field of pricing for production factors.

Test:

1. Determine whether the following statement is true (B) or false (F):

1) Macroeconomics is a part of economic theory that studies the patterns of functioning and trends in the development of the country’s economy as a whole.

2) The market for goods and services is a market in which households sell their factors of production to entrepreneurs.

3) The model of the circulation of resources, products and income assumes that households spend all their cash income.

4) The model of the circulation of resources, products and income explains how prices for goods and services are formed.

5) The second division of social production produces means of production.

2. For each of the provisions below, find the corresponding term or concept:

1) Costs of newly produced means of production (machines, machine tools, equipment, buildings) intended for the production process and replenishment of inventories.

2) Personal income minus individual taxes.

3) Export of goods and services minus import of goods and services.

4) Goods and services purchased for final use (and not for further processing or resale).

5) State payments to individuals (or families), received free of charge.

6) Summation of all expenses in the economy for the purchase of final products.

7) Gross investment minus depreciation.

8) All government expenditures on final goods and services (they do not include transfer payments).

9) Household expenditures aimed at purchasing consumer goods and services.

10) A continuous increase in the average price level in the economy, the depreciation of money, which occurs due to the fact that there is more of it in the economy than is needed, i.e. The money supply in circulation “swells.”

11) A situation in which inflation is alternately supported by both inflationary factors of demand and inflationary factors of supply, and the action of each of these factors will be caused by the action of the opposite factor.

12) Change in nominal income minus the inflation rate.

13) Nominal interest rate minus the inflation rate.

14) Anti-inflationary policy of the state, which involves adapting to inflation and mitigating its consequences.

15) Anti-inflationary policy of the state, aimed at eliminating the causes of inflation.

Task

The following information is available: number of employees: 90 million people. The number of unemployed is 10 million people.

Define:

Unemployment rate.

A month later, out of 90 million people who had jobs, 0.5 million people were laid off; 1 million people among the officially registered unemployed stopped looking for work. What is the current number of employed people, the number of unemployed people and the unemployment rate?

OPTION 15.

Abstract topic:

“Financial system and its stability in a market economy”

Sample plan:

1. Financial system, its structure and functions.

2. The state budget and its role in the economy.

3. Financial crises: essence, causes and consequences.

Test: