Development and justification of the system methodological approach to assessing the investment business project implementation efficiency under conditions of the external market environment factors impact

Abstract

Evaluating the effectiveness of the implementation of an investment project is a key issue when making management decisions both at the stage of setting up a startup and for expanding an existing business. This paper reports a systematic approach to building a mathematical model to solve the task of forecasting the effectiveness of business projects, taking into account the influence of factors of the external economic environment. Proposed factors include the impact of supply and demand on the price of goods, political and industry risks, the volume of commodity supply and sales. In view of this, a method for calculating the political component of the discount coefficient using the Fourier series has been proposed. Using the theory of differential equations, correlation and regression analysis, a mathematical model for forecasting indicators of efficiency of business project implementation taking into account the influence of factors of the external economic environment has been constructed. Based on it, a generalized algorithm for applying a mathematical model to predict the effectiveness of investment projects in various business sectors has been developed. The results from applying differential equations and variable discount coefficient showed a decrease in NPV by 14 %, and PI by 5.1 %, due to more accurate consideration of the political component in calculating the discount factor. Also, with the influence of supply and demand on the price of goods and nonlinear cash flows, it was found that the payback period does not clearly indicate the effectiveness of the implementation of an investment business project. Determining these factors provides more accurate information to the investor or business owner when forecasting the stability of a business project for making management decisions on its implementation

Peculiarities of the Net Present Value and Profit Index Calculations Using Continious Functions and Differential Equations Models

“…Using this methodology, a generalized test mathematical model was developed to forecast the efficiency indicators of the portable power generator store startup. Test calculations have shown good prediction accuracy using this model [7]. However, the task of refining the methodology for calculating the NPV and PI indicators when modeling them by continuous functions in the right-hand sides of ordinary differential equations still remains.…”

“…Considering this, the authors of this paper proposed a methodological framework for creating a mathematical model for predicting the parameters of business project implementation efficiency based on the use of ordinary differential equations [7]. Using this methodology, a generalized test mathematical model was developed to forecast the efficiency indicators of the portable power generator store startup.…”

“…In turn, there are 3 strategies for the cur V . According to [7] these strategies are: a) linear production; b) production with an increase according to the parabolic law; c) production with an extension according to the law of the cubic parabola. Taking into account these three types of production strategies, the first equation of the system (1) can be written as [7]:…”

“…Given the above shortcomings and the peculiarities of determining the degree of stochasticity of the modern market environment, it is proposed in [7] to calculate r using continuous functions and Fourier series. In turn, the calculation of NPV and PI was carried out using differential equations [7].…”

“…Given the above shortcomings and the peculiarities of determining the degree of stochasticity of the modern market environment, it is proposed in [7] to calculate r using continuous functions and Fourier series. In turn, the calculation of NPV and PI was carried out using differential equations [7]. This approach made it possible to increase the accuracy of forecasting the main indicators of the investment business projects implementation effectiveness by defining the discounting process as a function that continuously changes over time under the influence of the EEE factors.…”