KONFLIKTI U RANGIRANJU KONKURENTNIH INVESTICIONIH PROJEKATA

Abstract

There are numerous methods while assessing efficiency of investment ventures that are based on discount technique and which take into consideration time value of money. All these methods have both good and bad sides. Hence the methods of net present value and internal rate of return represent basic methods in this group; we will focus our attention on those flaws which result in paradoxical situation in ranking projects and alternative decision-making while choosing specific investment variations. When it comes to independent projects there is a rule that if the project has positive net present value or in other words if the internal rate of return is higher than the rate of investment criterion, the project should be accepted; otherwise, if the net present value is negative or if the internal rate of return is lower than the rate of investment criterion, the project should be rejected; if the net present value is equal to zero or in other words if the internal rate of return is equal to the rate of investment criterion, one should behave indifferently towards such investment proposal. In case of choosing one among many projects that are available to a decision-maker while all of them are assessed with positive net present value and with internal rate of return higher than rate of investment criterion, should one give advantage to a project with higher net present value and less internal rate of return or to a project with less net present value and higher internal rate of return?.