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Presented costs

When comparing possible options any decision technical problem, rationalization proposals, technical improvements, in various ways improving product quality to the best among other things equal conditions The option that requires a minimum of reduced costs is considered.

Reduced costs are the sum of current costs taken into account in the cost of production and one-time capital investments, the comparability of which with current costs is achieved by multiplying them by the standard coefficient of efficiency of capital investments.

The latter represents the minimum standard of efficiency of capital investments, below which they, other things being equal, are inappropriate. The methodology (basic provisions) for determining the economic efficiency of using new technology, inventions and rationalization proposals in the national economy has adopted a standard efficiency coefficient for all industries national economy equal to 0.15.

When implemented in enterprises technical events the given costs are an estimated value that takes into account the minimum permissible effect from the growth of labor productivity (labor savings) with an increase in the capital-labor ratio.

The use of reduced costs provides a national economic approach to assessment economic effect as a result of the creation and use of new technology to replace the old one.

Lectures investments.doc

Conditions for the profitability of the more capital-intensive option of the two considered (formula 9):

The methodology for determining the comparative efficiency of capital investments is based on a comparison of the given costs by option. According to this methodology, an economically feasible option is considered to be the one that provides a minimum of reduced costs, i.e. This criterion is called minimum reduced costs and was widely used in a planned economy.

(12)

The use of these costs in the practice of comparing options allows us to formulate several consequences, the use of which will simplify the calculation procedure and speed up the selection of the best options without losing the accuracy of the conclusions:

• 
  If options that have the same capital investments are considered among themselves, then best option selected according to the minimum production cost;
• 
  If options are considered that have the same production costs, then the best one is selected based on the minimum capital investment;
• 
  If among the options under consideration there is the same part of the cost and the same part of capital investments, then the best one is selected only based on the changing parts of current and capital costs (for example, if the options include the material intensity of products as part of the cost, then the best one will be determined by the minimum material costs, and there is no need to determine the entire cost).

1. 
   For all compared options, the annual production volume should be exactly the same;
2. 
   The quality of the products must be the same;
3. 
   All compared options must undergo a preliminary examination in relation to an absolute assessment of effectiveness (this may be accepted for economic, social, political, environmental and other reasons);
4. 
   Annual production volume and quality of products by year life cycle projects must remain constant for a complete and objective comparison of the given costs;
5. 
   The norm of comparative economic efficiency of capital investments (E n--) must remain constant throughout the entire life cycle of the project and not change over the years of the specified period;
6. 
   Prices for the inputs used should remain relatively constant throughout the life of the project.

1. ^

   The given effect and area of ​​its use.

Current costs b

B 1
a B = N*C

Capital costs

K 1
K 2

When the production result in the form of enterprise revenue remains constant (line “a”) for comparative options due to the fact that they will have the same production volume and product quality, then the criterion of minimum reduced costs ensures the correct selection of the best option. This criterion, with constant revenue, maximizes the production result in the form of enterprise profit by minimizing costs. But since the constant value does not affect the final result of comparing the options, it can be discarded. If the specified conditions are violated, in this case the costs of the options will increase significantly, but obviously, the production results in the form of enterprise revenue will also increase (line “b”). Then the criterion must be replaced: from a minimum of costs it is necessary to move to a maximum of results.

To do this, we write down the condition for the profitability of a more capital-intensive option:

where B 1 and B 2 are revenue from investment options 1 and 2 for the year.

B 2 – C 2 – E n *K 2 > B 1 – C 1 – E n *K 1

In this inequality, we replace B 1 with N 1 * C 1, and B 2 with N 2 * C 2, where N 1 and N 2 are the annual production volumes for options 1 and 2, and C 1 and C 2 are prices, respectively sales of a unit of production. Then:

where C 1 and C 2 are the cost per unit of production for options 1 and 2 (C 1 =N 1 C 1; C 2 =N 2 C 2);

K 1y and K 2y – specific capital investments per unit of production (K 1y = K 1 / N 1; K 2y = K 2 / N 2).

Based on the condition of the profitability of the more capital-intensive option, the left side of expression (13) is larger than the right side. Therefore, by generalizing the presented expression, we will finally obtain a criterion for the comparative economic efficiency of additional capital investments, which will have the form:

where E p – indicator of the reduced effect, which acts as a comparative economic efficiency of additional capital investments.

This criterion completely eliminates the first three conditions (question 2), but its use also has restrictions formulated by conditions 4-6 (question 2). Therefore, if, when determining the best of the options under consideration, the specified conditions are not met in practice, one should resort to a system of indicators developed by world economic science.

^

Topic 11. Theoretical foundations of discounting

1. 
   Taking into account the time factor when assessing the effectiveness of investments
2. 
   Discount rate.
3. 
   Concepts for determining the discount rate.
   1. 
      Alternative Return Concept
   2. 
      Weighted average cost of capital

1. M.U., 91 (risk-free rate of return).
1. Taking into account the time factor when evaluating investment projects

Various aspects of the time factor. //Met rec. 200\\

One of the basic concepts of the economics of a commercial enterprise and the theory of managerial decision making is that that the value of a certain amount of money is a function of the time of occurrence of monetary income and expenses.

Various aspects of the influence of the time factor that must be taken into account when assessing effectiveness include:

1. 
   The dynamism of the technical and economic indicators of the enterprise, manifested in changes over time in the volume and structure of manufactured products and other indicators. This circumstance is taken into account by generating initial information to determine cash flows taking into account the features of the production process at each step of the billing period.
2. 
   Physical wear and tear of fixed assets, causing general trends to a decrease in their productivity and an increase in the costs of their maintenance, operation and repair (the rational service life does not always coincide with the depreciation period).
3. 
   Changes over time in prices for manufactured products and consumed resources.
4. 
   The discrepancy between the volumes of construction and installation work performed and the amount of payment for these works, in particular the need to pay advances to contractors.
5. 
   Variation in costs, results and effects.
6. 
   Changes in economic standards over time (tax rates, duties, excise taxes, minimum monthly wages, discount rates, etc.). Accounting is carried out by predicting upcoming changes in economic standards, or by assessing the sustainability of the project in relation to such changes, or by calculating the expected effectiveness of the project, taking into account the uncertainty of information about these changes.
7. 
   Time gaps between production and sales of products and between payment and consumption of resources.

1. 
   Associated with the depreciation of cash over time (inflation)
2. 
   Associated with the circulation of capital.

Build-up is a method of bringing multi-temporal inflows and outflows of funds generated by the project under consideration during the estimated period of time to the time of the start of investment to the time of the end of the project. The process of specifying an initial amount and interest rate in financial calculations.

The main criterion for evaluating projects is the minimum of reduced costs:

P i =C i + E n K +M T min,

Where : P i– reduced costs, million rubles;

WITH i - estimated cost of construction or cost of construction and installation work, million rubles;

E n- standard coefficient of efficiency of capital investments, equal to 0.14 in the construction industry;

TO- associated capital investments in the production base of construction, million rubles;

M- operating costs, million rubles/year;

T- payback period for buildings and structures is 7.14 years.

Associated capital investments (K) are calculated as the product of the main building materials on site for the cost of a unit of material at the base price. The calculation is made using the formula:

K =1.05 m i c i ,

Where: 1,05 – cost increase coefficient for Western Siberia (climatic zone I);

m i- quantity i-th material;

c i- unit cost i-th material, rub.

Consumption rates for basic materials are given in Table 14

Table 14

Indicators of consumption of basic materials during construction

residential and public buildings

End of table 14

SUMMARY TABLE OF TECHNICAL AND ECONOMIC INDICATORS

A system of technical and economic indicators completes the project. Comparison of the obtained values ​​with the standard level allows us to assess the compliance of the achieved levels of indicators with the established standard and judge the quality of the design solution.

The main technical and economic indicators are presented in tabular form (Table 15).

Table 15

Main technical and economic indicators

LITERATURE

1. Varezhkin V.A., Grebenkin V.S., Kiryushechkina L.I. and others. Economics of Architectural design and construction. – Moscow: Stroyizdat, 1990. – 271 p.

2. Calculation of technical and economic indicators of projects in course and diploma architectural design ( guidelines). – Novosibirsk: Novosibirsk Architectural Institute, 1995.- 44 p.

3. Simonov Yu.F., Kanter M.M., Titomirov N.N. and others. Economics of urban planning ( training manual for universities). - Moscow-Rostov-on-Don: Publishing center "MarT", 2003. - 383 p.

4. SNiP 2.07.01-89*.Urban planning.Planning and development of urban and rural settlements. – M: Stroyizdat, 1997. - 56 p.

5. Chernyak V.Z. Economics of construction and public utilities. - Moscow: Unity-Dana, 2003. – 615 p.

6. Economic assessment of the project for planning and development of a settlement (methodological instructions). – Novosibirsk: Novosibirsk Architectural Institute, 1994 - 11 p.

COSTS GIVEN

COSTS GIVEN

(ZP) ( English reduced costs)

an estimated indicator of the comparative economic efficiency of a given decision in the field of production organization, technical and economic policy, the minimum of which is a criterion for selecting the best option from the alternatives under consideration; formula ZP = C + EK, where C is the cost of the future product (decision), K is capital investments (investments) for this decision, E is the standard coefficient of efficiency of capital investments (equal to the reciprocal of the payback period, for example, if the payback period is 6 years, then E=1/6). From the options (C+EK), the one that gives the minimum salary is selected.

Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B.. Modern economic dictionary. - 2nd ed., rev. M.: INFRA-M. 479 pp.. 1999 .

Economic dictionary. 2000 .

See what “GIVEN COSTS” is in other dictionaries:

Costs consisting of the cost of production and profit equal to capital investments multiplied by the standard efficiency ratio; or consisting of the cost price for the payback period of capital (equality of accumulated profit and... ... Dictionary of business terms

reduced costs- Costs in the form of the sum of two components: production costs and capital investments, multiplied by the standard efficiency coefficient. In practice, the minimum P.z. are used as a criterion for the effectiveness of new technology and capital investments... Technical Translator's Guide

Costs given- – the sum of the estimated cost and operating costs, reduced to annual dimensions using appropriate coefficients. [Recommendations for the further use and development of various structural systems used in housing... ... Encyclopedia of terms, definitions and explanations of building materials

Costs given- is an estimated indicator of the comparative economic efficiency of a given decision in the field of production organization, technical and economic policy, the minimum of which is a criterion for selecting the best option from the alternatives under consideration... Commercial power generation. Dictionary-reference book

COSTS INVOLVED- costs in the form of the sum of two terms: production costs and capital investments, multiplied by the standard efficiency coefficient. In practice, the minimum P.z. are used as a criterion for the effectiveness of new technology and capital investments... Great Accounting Dictionary

COSTS INVOLVED- costs in the form of the sum of two terms: production costs and capital investments, multiplied by the standard efficiency coefficient. In practice, the minimum P.z. used as a criterion for the effectiveness of new technology and capital investments... Large economic dictionary

COSTS GIVEN- is an indicator for assessing the effectiveness of capital investments, which allows you to choose the most economical option, i.e. the option that provides the minimum amount of reduced costs. Zpr = Ci RplKvi. ? min, where Zpr – reduced costs; ... Brief dictionary economist

- (ZP) an estimated indicator of the comparative economic efficiency of a given decision in the field of production organization, technical and economic policy, the minimum of which is a criterion for choosing the best option from those considered... ... Encyclopedic Dictionary of Economics and Law

reduced costs- an estimated indicator of the comparative economic efficiency of a given decision in the field of production organization, technical and economic policy, the minimum of which is a criterion for choosing the best option from those considered... ... Dictionary of economic terms

Presented costs- [reduced cost] 1. Calculation category reflecting the amount of current and one-time (capital) costs for production. In the centralized planning system, the following formula P.z. was used: Zp = C + En x... ... Economic-mathematical dictionary

An investment project can be considered both the justification of large-scale investments associated with new construction and reconstruction of enterprises, and the justification of relatively small investments, for example, the purchase of new machines, equipment, vehicles. Currently, it is recommended that the same indicators be used to evaluate all projects. For these purposes, “ Methodical recommendations on assessing the effectiveness of investment projects." The main indicator in them is net present value, which is the difference between the amount of discounted income and investments for the entire life of the project. This indicator is generally accepted and quite reasonable; at the same time, its use at the initial stages of justification for an investment project is not very convenient. At the initial stages, issues of inclusion in investment project various fixed assets, therefore the task of comparing them based on the results is relevant economic justification. Calculating the net present value for each of the assets being compared is difficult and very time-consuming. In this regard, the task of simplifying the calculations is urgent, which requires the development of simpler indicators. One such indicator is levelized costs, which were used for economic justification during the planned economy. Key indicator they contain a standard efficiency coefficient, the value of which was calculated for the conditions of a planned economy and is currently inapplicable. The article proposes a new method for determining the efficiency ratio of capital investments, which corresponds to the principles of calculating indicators laid down in the “Methodological recommendations for assessing” the effectiveness of investment projects. The use of this methodology makes it possible to make the indicator applicable in modern conditions, and helps to significantly simplify the procedure for selecting fixed assets for inclusion in an investment project.

capital investment efficiency ratio

standard efficiency coefficient

reduced costs

net present value

fixed assets

investment project

1. Federal Law “On investment activities in Russian Federation carried out in the form of capital investments": collection of legislation of the Russian Federation, 1999, No. 39, part I, art. 1.

2. Ginzburg M.Yu., Kokin A.S., Ageev A.A. Problems in determining the discount rate for various directions activity of the enterprise // Vestnik Nizhny Novgorod University them. N.I. Lobachevsky. 2009. No. 2. P. 166.

3. Gospodarchuk G.G., Anikin A.V. Assessing the level of stability of the Russian banking system//Money and Credit. 2014. No. 5. P. 24-30.

4. Demakov I.V. Economic efficiency of capital investments in agricultural machinery (based on materials from the Nizhny Novgorod region): dis... cand. economy Sciences. Nizhny Novgorod, 2005.

5. Novikov M.V. Increasing the economic efficiency of on-farm processing of agricultural products in market conditions: dis... cand. economy Sci. Nizhny Novgorod, 2005.

8. Pavlova I.A. Justification for choosing a method for calculating the discount rate when valuing a business // International scientific publication Modern fundamental and applied research. 2014. No. 3 (14). pp. 76-79.

9. Pavlova I.A., Pavlov A.S. Technical and economic analysis when introducing innovations into manufacturing plant // Economic analysis: theory and practice. 2014. No. 40. P. 14-21.

10. Serov A.A. Increasing the efficiency of program-target management agriculture(based on materials from the Nizhny Novgorod region): dis... cand. economy Sciences. Nizhny Novgorod, 2006.

11. Soviet encyclopedic dictionary / Ch. ed. S. M. Kovalev. – M.: Soviet encyclopedia, 1979. – 1600 p.

Currently, to assess the feasibility of making real investments, the system of indicators proposed in the “Methodological recommendations for assessing the effectiveness of investment projects”, which were approved by the Ministry of Economy of the Russian Federation, the Ministry of Finance of the Russian Federation and the State Construction Committee of the Russian Federation dated June 21, 1999 N VK 477, is used.

The use of this methodology is an objective necessity, since at one time the goal was set of unifying the methodological apparatus used in Russia during the transition period and abroad. At the same time, we must conclude that the previously used system of indicators economic assessment remained undeservedly forgotten. The first edition of the guidelines appeared in 1994, the second - in 1999.

The main indicator of economic assessment, according to the recommendations, is net present value; other indicators are additional:

where: - results achieved at the calculation step, rub.;

Costs incurred at the same step, rub.;

Calculation horizon, years;

Effect achieved per step, rub.;

E is the discount rate equal to the rate of return on capital acceptable to the investor.

This indicator is generally accepted and quite reasonable; at the same time, its use at the initial stages of justification for an investment project is not very convenient.

The methodological recommendations propose a system of indicators that must be used to justify the effectiveness of investment projects. In turn, according to Federal Law“On investment activities in the Russian Federation, carried out in the form of capital investments”, an investment project is defined as “... justification of the economic feasibility, volume and timing of capital investments, including the necessary design and estimate documentation, developed in accordance with the legislation of the Russian Federation and approved in accordance with the established procedure by standards (norms and rules), as well as a description practical actions for investment (business plan)".

Thus, the Methodological Recommendations must be used for the final assessment of the developed investment project. However, the problem is that a preliminary justification for the feasibility of selecting fixed assets for inclusion in the investment program is often required, since an investment project (low-cost projects may be an exception) is a set of possible options for construction projects, technical and technological solutions, each which are related to investments. Calculating the net present value for each of the assets being compared is difficult and very time-consuming.

At the stage of preliminary selection of fixed assets for inclusion in the investment program, it would be possible to use the levelized cost indicator, which was widely used during the planned economy.

Reduced costs are an economic category that reflects the value (in value terms) of the total costs of social labor (current and one-time) for production. Numerically reduced costs are equal to the sum of total current costs (including depreciation) and the part of capital investments corresponding to their standard.

The main advantage of this indicator is its simplicity. The researcher had a clear understanding of the costs that are associated with the use of a particular technical tool. In this regard, the capital investment efficiency ratio was convenient to use both for annual planning of equipment use and for assessing the comparative effectiveness of purchased technical equipment.

In normal recording, the given costs (Pz) have the following form:

P z = C i + E n ∙K i,

where: Ci - current costs for options;

Ki - capital investments according to options;

En - standard efficiency coefficient.

The key role in the formula belongs to the part of the reduced costs equal to the product of capital investments by the standard efficiency coefficient. The purpose of the standard coefficient is essentially the same as that of the interest rate in the net present value indicator; it plays the role of a kind of filter when selecting investments. Thus, the indicator of present costs and the indicator of net present value have in common the use of interest when justifying the choice of investment option. The difference lies in the accrual schemes used.

The formula for calculating net present value uses a compound interest scheme. The formulas for calculating the given costs use a simple interest calculation scheme. In addition, the calculation of present costs is associated with the operation of increasing interest, and the determination of net present value is associated with the discounting operation. This circumstance is revealed when the main components of the given costs are decomposed into several components.

Current costs include operating costs and depreciation, that is

С i = С ia + А i,

where: Cia - current costs for options without depreciation;

Аi - depreciation charges according to options.

Substituting this amount into the formula for present costs instead of current costs, we obtain that

P z = C ia + A i + E n ∙K i.

Depreciation charges over the useful life of a fixed asset are approximately equal to capital investments, that is:

A i ∙ n= K i,

where n is the useful life of the fixed asset.

If we substitute capital investments into the formula for reduced costs instead of depreciation charges over the useful life, we get

P z = CiA+ (K i + E n ∙K i∙ n)/ n,

C i + E n ∙K i = C ia + K i ∙ (1+E n ∙ n)/ n,

but the product Ki ∙(1+En∙ n) represents the calculation of interest according to a simple scheme.

Since in world practice the scheme of compound interest calculation has become more widespread when justifying long-term investments, then, in order to eliminate possible discrepancies in the assessment based on present costs and net present value, it is necessary to make some changes to the calculation of the first indicator, which is what we propose to do. In addition, the values ​​of standard efficiency coefficients were determined for the conditions of a planned economy and currently may lead to an incorrect result.

When developing the formula, the task was posed as follows. At time t0, a technical device is purchased, the cost of which is K. After n years, the investment K could be larger in size compared to the initial value if the money were invested in alternative options. In order to take this circumstance into account, it is necessary to use the compound interest calculation scheme:

TOn =K∙(1+r) n

where: K - initial invested capital;

r - required profitability;

Kn is the amount of invested capital after n years;

In this work, we will not dwell in detail on the methodology for determining the required profitability indicator. We can only note that this issue is considered in the works of many domestic and foreign economists. So, for example, Ginzburg M.Yu., Kokin A.S., Ageev A.A. explore the problems of determining the discount rate for various areas of the enterprise's activities. Pavlova I.A. considers the issue of justifying the choice of method for calculating the discount rate when valuing a business.
Anikin A.V. and Gospodarchuk G.G., when bringing the value of consolidated assets of commercial banks (including fixed assets, other real estate, intangible assets), they take the refinancing rate of the Central Bank of the Russian Federation as a basis.

It must be taken into account that annually a certain amount will be returned in the form of depreciation charges. In essence, the annual depreciation charge represents a post-numerando annuity:

where: A - annual depreciation charges;

An is the future value of the post-numerando annuity, that is, the future value of depreciation charges.

Taking into account annual depreciation charges, Kn will be calculated using the following formula:

,

where: Kna is the amount of invested capital after n years, taking into account depreciation charges.

This formula determines the amount of invested capital, taking into account opportunity costs for the entire useful life of the fixed asset. In order to bring the indicator to an annual dimension, it is necessary to determine the average annual base growth rate of opportunity costs.

where: TPb - basic growth rate for period n.

TR b =TP b+ 1,

where: TRb is the base growth rate for period n.

To find the average annual growth rate, it is necessary to take the root to the power m, where m = n+1. To obtain the average annual growth rate, it is necessary to subtract 1 from the resulting coefficient. This will be the investment efficiency ratio, since the growth rate shows how many units the initial indicator increases on average per year, that is, how many units the opportunity costs increase on average.

Thus we have:

with K=1 we get:

Thus, capital investments in the given costs will be:

where: Knр - capital investments in reduced costs.

Sometimes it is more convenient to use the efficiency coefficient in relation to depreciation, then there is no need to carry out additional calculations when calculating the present costs per unit of output. In this case, the efficiency coefficient will be calculated as follows:

where Ea is the capital investment efficiency coefficient for depreciation.

To simplify the calculations, a computationally complex part of the indicator, such as the capital investment efficiency coefficient (Ek), or (Ea), can be presented in the form of tabular values ​​of the multiplying factors, which will significantly simplify the calculations. These indicators are easily tabulated, since they depend on changes in only two parameters: r and n.

For example, woodworking equipment for furniture production is included in the fourth depreciation group with a useful life of up to 7 years inclusive. The table shows the multiplying factors when the required return rate changes from 1% to 10% (this indicator is indicated in the table as a coefficient).

Tabulated values ​​(Ek), and (Ea)

The use of the present cost indicator at the stage of selecting fixed assets for inclusion in an investment project will significantly simplify the calculations and allow you to select the best option without determining net present value, which is more complex in terms of calculation methods. Thus, the methods of economic assessment used in a planned economy, after adapting them to the currently used system of indicators, can take their place in the system of economic justification for investment projects.

Reviewers:

Druzhilovskaya T.Yu., Doctor of Economics, Professor of the Department of Accounting, Institute of Economics and Entrepreneurship, Federal State Educational Institution of Higher Education "Nizhny Novgorod" state university them. N.I. Lobachevsky", Nizhny Novgorod;

Kokin A.S., Doctor of Economics, Professor of the Department of Finance and Credit, Institute of Economics and Entrepreneurship, Nizhny Novgorod State University. N.I. Lobachevsky", Nizhny Novgorod.

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