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Methods Indicators Equivalence for Economic Research of the Long-Term Capital Investment Project

Author

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  • Sorin-Iuliu Mangu

    (University of Petrosani, Romania)

  • Ilie Răscolean

    (University of Petrosani, Romania)

Abstract

In economics, projects having an economical life more than a yearlong are considered log term investments. An economic study of these projects cannot skip over the fundamental criteria represented by the economic indicator known as the “invested capital return”. The trend of merging of the most important methods for economic study of long term investment projects have led to defining four fundamental methods: the internal rate of return method; -the explicit reinvestment rate of return method; the annual value method; the present value method. We could demonstrate the equivalence of these indicators for projects that allow application of these four methods.

Suggested Citation

  • Sorin-Iuliu Mangu & Ilie Răscolean, 2013. "Methods Indicators Equivalence for Economic Research of the Long-Term Capital Investment Project," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 13(1), pages 173-182.
    • Handle: RePEc:pet:annals:v:13:y:2013:i:1:p:173-182
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    More about this item

    Keywords

    long-term capital investment projects; economic study; internal rate of return; explicite reinvestment rate of retourn; annual value; present value;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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