MATHEMATICAL MODELS OF DISCOUNTING METHODS IN EVALUATION OF INVESTMENT PROJECTS

Abstract

Annotation: This scientific article analyzes the mathematical foundations of the theory of the time value of money and discounting methods in assessing the economic efficiency of long-term investment projects. The relevance of the study is that in a modern economy with inflation and opportunity costs, calculating the future nominal income of the project leads businesses to incorrect conclusions. To solve the problem, the mathematical model of Net Present Value (NPV) and the formula of compound interest were used. Using the example of a conditional production enterprise, the future cash flows of the investment project were discounted to the present day, and the real economic efficiency of the project was calculated. As a result of the study, the decisive importance of the NPV indicator in making investment decisions for local enterprises was mathematically proven.