English

Vol. 8 2, 2018 p 206-217

Pages

Article name, authors, abstract and keyword

206-217

Discount rate calculation for investment projects economic efficiency valuation

Pavel Y. Serikov a, Konstantin A. Sivolotsky a, Andrey A. Mestnikov a

a Transneft, 57 Bolshaya Polyanka Str., Moscow, 119180, Russian Federation

DOI: 10.28999/2541-9595-2018-8-2-206-217

Abstract: The time value of money is a key principle in the process of investment projects efficiency valuation. Time-discrete cash flows discounting to the current moment is realized by using such important economic indicator as a discount rate. The results of economic efficiency valuation and consequently the quality of investment decisions directly depend on the discount rate value. The article describes the global practice of discount rate estimation methods application, their advantages and drawbacks. Provides the rationale of the choice of discount rate calculation method as weighted average cost of capital with capital assets pricing model as cost of equity estimation with regard to the valuation of economic efficiency of the investment projects in oil and oil products pipeline transportation industry. The article also describes detailed discount rate calculation algorithm and provides an example of the discount rate calculation with references to the main sources of used information.

Keywords: discount rate, weighted average cost of capital, WACC, capital asset pricing model, .

Reference for citing:
Serikov P. Y., Sivolotsky K. A., Mestnikov A. A. Discount rate calculation for investment projects economic efficiency valuation. Nauka i tehnologii truboprovodnogo transporta nefti i nefteproduktov = Science&Technologies: Oil and Oil Products Pipeline Transportation. 2018;8(2):206217. DOI: 10.28999/2541-9595-2018-8-2-206-217.

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