Relationships and Dependencies between Discount Methods Used in Capital Budgeting Process in Enterprises

摘要

Both in theory and in practice, we can distinguish many financial methods used in the evaluation of investment projects in enterprises. Among them, the most important group constitutes the discount methods, primarily because of their advantages. First of all, they take into account the changing value of money over time. Moreover, knowing not only the advantages but also disadvantages of these methods is a prerequisite for their proper use in practical investment. Knowledge of the mutual relationships and dependencies between these methods is equally important for the success of the investment process. This directly affects the final investment decisions in enterprises, where, in today's practice, on the one hand, the financial viability of projects is being assessed, and, on the other hand, the risks associated with the investment. Therefore, the aim of this paper is to present the methodological problems associated with measuring the financial efficiency of investment projects implemented by the enterprise. In particular, the paper presents both the advantages and disadvantages of discount methods as well as mutual relationships and dependencies between the results of these methods.