1. Investment: significant one-shot expenditures expecting long- term stream of benefits in the future Economic Value Added: difference between return on capital and cost of capital Investment Strategy: selection of investment goals and choice of alternatives how to achieve the goals INVESTMENTS

2. Investments Typical features of an investment project: long-term time horizon higher risks capital intensive requires good planning - strategy - return on investment - feasibility - financials - time - capacity

3. Investment Strategy Factors influencing the investor during his decision making: Expected return on investments Expected risk Expected impact on liquidity

4. Types of Investors a Strategies Types of investors: aggressive conservative Types of strategies: profit maximization cash flow maximization investment maximization (growth strategy)

5. EVA (Economic Value Added) V d return on capital achieved (%) V p return on capital expected (%) Ktotal capital (CZK)

6. INVESTMENT PROJECTS Investment Project: investment at the stage of planning or implementation Conventional Cash Flow: stream of cash flows when an initial cash outflow is followed by a stream of cash inflows Feasibility Study: document summarizing strategic, financial, technical a business information needed for go / no-go decision making

7. Categories of Investment Projects By accounting standards: financial tangible intangible In respect to the business development expansion renewal regulatory- work safety - environment - new regulations

8. Categories of Investment Projects By interference incompatible (mutually exclusive) independent complementary By cash flow conventional − initial cash outflow(s) is(are) followed by a stream of cash inflow(s) unconventional − secondary investments are needed during the project existence (landscape re-cultivation, general repairs, etc.)

9. Categories of Investment Projects By substance new equipment new product (set of development activities) new organizational structure new company (acquisition project) new legislation new markets, new territories By historical existence green field − doesn't interfere with other activities in the company in a well-established company – usually there exist some historical ties, influences, and interests

10. Phases of Investment Process Pre-investment phase project identification feasibility study go / no-go Investment phase establishment of legal, financial and organizational base technological documentation suppliers human resources trial run, debugging Operational phase

11. Project Identification Business environment identification supply of products, raw materials, services, capital, HR new technologies impact of legislative, political a economical development Preliminary selection monitoring of possibilities evaluation of attractiveness of the opportunity preliminary estimate of return and profitability

12. Evaluation Technques Static average annual profit (total profit/time) average payback period (total investment exp/avg annual income) average rate of return (avg annual income/total investment expenses) Dynamic (will be discussed next semester) NPV (Net Present Value) IRR (Internal Rate of Return) PP (Paybeck Period) PI (Profitability Index)