Abstract:
From the corporate point of view we can define investment as a single or short-term spend resources that will provide revenue in the future. Investing includes the process of acquisition of long-term assets. Part of this process is created by decision about economic efficiency of investment. It consists of four parts like determination of capital expenditures needs of investment, determination of cost of capital, estimation of future net incomes of investment (cash flow) and also the risks related with these incomes. The last part is the evaluation of economic efficiency of investment projects. The estimation of net income that the investment will bring is the critical part of investment decision. The correct estimation of the present value of income affects the objective (internal, external) and subjective assumptions. The objective prerequisites are the realized production volume, the implementation price, costs of production, durability life of long-term assets, changes of market conditions, inflation, etc. The subjective assumptions result from the expert´s knowledge, practical experiences and knowledge of internal and external business
environment.
