2017Serbian Journal of Engineering ManagementOpen access

Selection of optimal methods of investment decision-making in management of business processes

Živko Ralić

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Abstract

This paper identifies the selection of optimal methods of investment decision-making in function of management with business processes. It was created as a result of the analysis of necessary actions to be taken in order to increase energy efficiency of residential buildings. Measures taken in the energy rehabilitation of buildings were analyzed by the following methods: net present value, internal rate of return and payback period method. A comparative analysis was performed on a real projects of energy rehabilitation for four buildings. The results showed that the applied methods are compatible and differ in the mode of displaying the results. The net present value expressed the result as a monetary value in the present moment, that shows how much money you will earn evaluated project. Methods of internal rate of return indicate the profitability of the project, expressed in percentages, a payback period method possesses time dimension, because it indicates how long it takes (number of years) to payback the investment outlays. Due to the specifics of the problem the placing payback period method is to the fore.

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This paper identifies the selection of optimal methods of investment decision-making in function of management with business processes. It was created as a result of the analysis of necessary actions to be taken in order to increase energy efficiency of residential buildings. Measures taken in the energy rehabilitation of buildings were analyzed by the following methods: net present value, internal rate of return and payback period method. A comparative analysis was performed on a real projects of energy rehabilitation for four buildings. The results showed that the applied methods are compatible and differ in the mode of displaying the results. The net present value expressed the result as a monetary value in the present moment, that shows how much money you will earn evaluated project. Methods of internal rate of return indicate the profitability of the project, expressed in percentages, a payback period method possesses time dimension, because it indicates how long it takes (number of years) to payback the investment outlays. Due to the specifics of the problem the placing payback period method is to the fore.

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This paper identifies the selection of optimal methods of investment decision-making in function of management with business processes. It was created as a result of the analysis of necessary actions to be taken in order to increase energy efficiency of residential buildings. Measures taken in the energy rehabilitation of buildings were analyzed by the following methods: net present value, internal rate of return and payback period method. A comparative analysis was performed on a real projects of energy rehabilitation for four buildings. The results showed that the applied methods are compatible and differ in the mode of displaying the results. The net present value expressed the result as a monetary value in the present moment, that shows how much money you will earn evaluated project. Methods of internal rate of return indicate the profitability of the project, expressed in percentages, a payback period method possesses time dimension, because it indicates how long it takes (number of years) to payback the investment outlays. Due to the specifics of the problem the placing payback period method is to the fore.

Key concepts: Payback period, Internal rate of return, Net present value, Profitability index, Investment (military), Rate of return, Selection (genetic algorithm), Return on investment

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