Expected net present value – instrument for profitable investment

165 EXPECTED NET PRESENT VALUE – INSTRUMENT FOR PROFITABLE INVESTMENT Pa la Š e mo á Technical Uni e si y o Libe ec Facul y o Economics S uden ská 2, 461 17, Libe ec 1, Czech Republic [email p o ec ed] Abs ac Each business en i y compe ing o i s compe i i e ad an age on he ma ke is cu en ly awa e o he impo ance o esea ch, de elopmen and inno a ion. The hypo hesis s a es: “The companies knowing me hods o echnologies´ e alua ion a e p o i able”. This pape is ocused mainly on he a ea o he economy o enewable ene gy sou ces, esp. on he alua ion o selec ed echnology in his a ea. Fi s he p ocess o indus ial esea ch and de elopmen is men ioned in he in oduc ion; he lis o possible me hods ha can be used o a ious echnologies e alua ion ollows; and in he inal pa o he pape he speci ic eal case s udy o he small Hyd oelec ic Powe Plan p ojec alua ion is demons a ed. The me hod o ENPV (including he decision ee, p obabili ies and ne p esen alue) was chosen; ou possible scena ios a e p esen ed in he pape . Finally he bes scena io has been selec ed and he hypo hesis con i med. In oduc ion Technologies a e mo ing wi h wo ld! Each business en i y compe ing o i s compe i i e ad an age on he ma ke is cu en ly awa e o he impo ance o esea ch, de elopmen and inno a ion. J. A. Schumpe e ´s mo o “Who don´ inno a e – will die" was wo h ul in he pas and is wo h ul also in he p esen . Ve y impo an is he connec ion o he echnical aspec s o he esea ch and de elopmen wi h i s economic aspec s. Acco ding o Boe [2] he echnology is a concep ha can be de ined, o example, as ollows: “Using he knowledge o p o i able objec i es”. This pape is ocused mainly on he a ea o he economy o hyd oelec ic ene gy, esp. on he alua ion o his echnology. Fi s he gene al p ocess o indus ial esea ch and de elopmen is men ioned in he in oduc ion. The nex pa is de o ed o he possible me hods ha can be used o echnologies e alua ion. In he hi d main pa o he pape he e is e e ed o he speci ic case s udy o he small hyd oelec ic powe plan p ojec alua ion (by Expec ed Ne P esen Value). Fou possible scena ios a e p esen ed he e. Finally he bes scena io is selec ed. The exhaus ibili y o non- enewable mine al esou ces has been o a long ime a ecu en opic o many discussions; numbe o p o essional essays by au ho s headed by J. Simon [10] o B. Lombo g [7], p oclaim ha . Sla ík [11] also says ha he o en neglec ed indica o o sca ci y o aw ma e ials on he ma ke is hei p ice, which plays a i al ole no only in he case o p ima y aw ma e ials, bu also o o he goods and se ices. The ques ion ( he hypo hesis) s a es: “The companies knowing me hods o echnologies´e alua ion a e p o i able and may help hei egions o achie e any compe i i e ad an age and o s eng hen hei economic posi ion”. In he amewo k o his pape one o he possible me hods o al e na i e echnology alua ion o he p oduc ion o elec ical ene gy is demons a ed (on 166 he example o case s udy o small hyd oelec ic powe plan p ojec ), since his issue is pa icula ly opical oday. 1 P ocess o Indus ial Resea ch and De elopmen I he company wan s o e alua e i s echnology, i s i is necessa y o unde s and he p ocess, on he basis o which i s alue is o med. This p ocess is di ided in o i e successi e phases, each is ep esen ed by he deg ee o isk, oppo uni y, di e si ica ion, and he olume o cos s. Fig. 1 illus a es his si ua ion: Sou ce: [2], p. 65 F ig. 1 Key ela ionships in he p ocess o esea ch and de elopmen The size o he oppo uni ies and di e si ica ion is he minimum o he ini ial phase, as well as he cos s, and also he secu i y ha he echnology will be success ul and p o i able. The opposi e is he s a us o ea ly comme cializa ion, whe e di e si ica ion and an oppo uni y a e a a low le el, bu i is o se by a high le el o ce ain y. The cos s a e a his s age e y high. Summa iza ion ollows in Tab. 1. Tab. 1 Cha ac e iza ion o p ocess phases o esea ch and de elopmen Phase 0 Phase 1 Phase 2 Phase 3 Phase 4 Finding and ca ego isa ion o new ideas Concep ual esea ch Feasibili y sea ching De elopmen and cons uc ion Ea ly comme cializa ion Commi ed pe sons esea che s echnicians echnicians, lawye s, i m op managemen enginee s, consul an s, esea che s, ma que e s, esponsible manage ma ke ing specialis s, sale, p oduc ion, ope a ing mic o i m - manage , sale depa men , p oduc ion equipmen , accoun ing Financial and comme cial aspec s low, cca 10 % o budge (sho - ime ho izon) highe cos s on capi al and ime high cos s on ma ke esea ch inding o he eal u u e economic alue educ ion o inancial isks by inal ma ke pene a ion Sou ce:Own cons uc ion This pape is ocused on hyd oelec ic ene gy, esp. on alua ion o his echnology. We can conclude ha hyd oelec ic ene gy is si ua ed in he 4 h phase, esp. in he phase o ad ancing comme cializa ion. 167 2 P ocess o Indus ial Resea ch and De elopmen The alua ion o echnologies is a complex p ocess. Fi s , i is necessa y o de ine he speci ic echnology which we will assess. I we a e alking abou he alua ion o echnologies, we e e o he "ha d" echnologies. Fu he we ha e o ealize o wha pu pose he e alua ion will be used - whe he i should calcula e he p esen alue o he echnology, o o quan i y i s u u e alue. We can choose, o example, he simples me hod o he pu chase p ice, howe e , sui able only o ce ain ypes o echnologies (e.g. alua ion o echnologies o he ca p oduc ion). Fu he , he me hod o ma ke compa ison (i. e. benchma king). Fi s we ha e o de e mine whe he his me hod is easible ( easibili y analysis), hen collec and analyze he da a, app oxima ely e alua e i (using "benchma king clus e ") and a he conclusion mo e speci y he alua ion (e.g. e alua ion o he pa ame e s by he di e en (highe /lowe ) weigh , so we may cause an inc ease o educ ion o he inal p ice o he echnology). Thi d, le 's say he mos quali ied g oup o me hods, a e me hods based on he cash lows. In he amewo k o hese me hods D ořák [4] calcula es ne p esen alue and expec ed ne p esen alue o he echnologies. This pape is ocused jus on hese alua ion me hods, esp. one selec ed me hod: expec ed ne p esen alue - ENPV (see below). 2.1 Expec ed Ne P esen Value (ENPV) The expec ed ne p esen alue me hod is based on he concep o s uc u ed ans e o know- how and i akes in o accoun he isk ha ce ain paymen s a e no ealized. The p ocedu e o he alua ion o his echnology wi h his me hod acco ding o Valach [14] is ollowing: 1. C ea ion o he decision ee wi h possible op ions o u u e de elopmen and de e mina ion o he scena ios p obabili y (p obabili y = pn), see Fig. 2: F ig. 2 Decision ee 2. De e mina ion o he inancial lows Jn o each b anch o he decision ee. The calcula ion p ocedu e o Jn is he same as o he me hods o NPV. 3. Calcula ion o he NPVs o all inancial lows Jn o each decision ee b anch, acco ding o he o mula (1). (1) whe e: N numbe o s ages, D discoun ac o .    N nn n sD J NPV 1)1( 168 4. Calcula ion o he p obabili y o each b anch o he decision ee (known also as he "scena io"). The p obabili y o each b anch shall be equal o he a i hme ic p oduc o he p obabili ies o each e en wi hin he b anches. 5. ENPV is calcula ed by he sum o he indi idual NPVs weigh ed by he p obabili ies o each b anch acco ding o he o mula (2), whe e "p" means "p obabili y" (see Fig. 2). (2) 3 Case S udy (ENPV) - Small Hyd oelec ic Powe Plan P ojec E alua ion Gene al In o ma ion We assume ha he cons uc ion o he powe plan s will be ealized in a place whe e some wa e scheme al eady exis s, i.g. a wei . Fo his eason, he in es men s o cons uc ion wo k will be smalle han i i we e he cons uc ion o comple ely new wa e wo k. The building cos s a e es ima ed a 5 mil. CZK, and he cos s o he machine y and he connec ion o supply ne wo k a e es ablished in he amoun o 7 mil. CZK. These cos s will be in es ed in S age I, hey a e he same o all he cash low scena ios desc ibed below. The li e ime o he de ice is expec ed a leas 30 yea s, wi hou o he majo in es men s. The discoun a e, o yield o al e na i e in es men , has been calcula ed a a a e o 7 % (i is an a e age p o i abili y o chosen inancially secu e unds o i s hal yea 2011). The op imal ins alled powe on he basis o he cha ac e is ics o he wa e low and wa e scheme will be 20 kW. The edemp ion p ice o he elec ici y p oduced we assume o all scena ios in he amoun o 2.40 CZK/kWh [13]. Each scena io a ies in he es ima ed annual supply o elec ical ene gy o he ne wo k and in he annual cos s o he ope a ion as a pe cen age o ini ial in es men a indi idual s ages. 3.1 Decision T ee The alua ion me hod ENPV s a s wi h he ame o he decision ee o possible scena ios. Fig. 3 shows ha in ou case he ee has a o al o ou b anches o inancial lows, whe e J = inancial lows, p = p obabili y ha he e is a o eseeable de elopmen o he cash low. F ig. 3 Case S udy - Decision ee Fo each decision ee b anch he cash low was compiled. Cash low J1 emains he same o all ou scena ios. Fo he be e p edica i e acili y o he indi idual scena ios also wi h ENPV ano he h ee addi ional pa ame e s we e calcula ed:  Ne P esen Value (NPV),  Discoun ed Payback Pe iod (DPP),  In e nal Ra e o Re u n (IRR). s s sNPVpENPV *   169 3.2 Scena ios o ENPV Calcula ion  Scena io I Tab. 2 shows he ENPV calcula ion o he scena io I. I assumes ha , in he egula pe iod (i.e. in S age III), he e will be he annual deli e y o he ne wo k o 800 MWh, in he es ing pe iod i will be abou 100 MWh pe yea ewe , i.e. 700 MWh pe yea . The cos s o annual ope a ions o he powe plan s in S age II a e expec ed a he amoun o 3.5 % o o al ini ial in es men , in S age III hen only 3 % o he ini ial in es men . The expec ed ne p esen alue (ENPV) a 7 % o he discoun a e is calcula ed a 1,514,738 CZK. The esul s o he o he indica o s esul ing om Tab. 2 a e: NPV = 2,704,889 CZK, DPP = 19 yea s, IRR = 9 %. Tab. 2 Scena io I – ENPV  Scena io II In he same way as in Tab. 2 ENPV was obse ed in scena ios II, III and IV. A e he comple ion o he es ing pe iod in which we supply o he ne wo k o 700 MWh, he plan will supply annually o he ne wo k o 850 MWh in egula pe iod. The annual cos s in he es ing pe iod ha e been es ima ed in he amoun o 3.5 % o he ini ial in es men . A e he comple ion o es ing, we es ima e ha he annual cos s would all o 396,000 CZK, i.e. 3.2 % o he ini ial in es men in he echnology. The expec ed ne p esen alue (ENPV) is 827,647 CZK. The esul s o addi ional calcula ed pa ame e s a e he ollowing: NPV = 3,448,528 CZK, DPP = 18 yea s, IRR = 10 %.  Scena io III The hi d decision ee b anch was calcula ed on he basis o he ollowing c i e ia: in S age II we expec he supply o elec ici y o he ne wo k o 600 MWh pe yea , in S age III o 700 MWh pe yea . The annual cos s in he es ing pe iod ha e been expec ed a 4.2 % o he ini ial in es men . In he egula pe iod we assume hei decline o 2.9 % o he ini ial in es men . The expec ed ne p esen alue (ENPV) is 9,604 CZK. The esul s o he o he indica o s: NPV = 120,055 CZK, DPP = 30 yea s, IRR = 7 %. 170  Scena io IV The ou h b anch o he decision ee summa izes his pa ag aph o his pape . In he es ing pe iod we expec he supply o elec ici y o he ne wo k o 600 MWh pe yea . In he egula /s anda d pe iod hen he deli e y inc eases by 300 MWh pe yea , i.e. o 900 MWh pe yea . The annual cos s o he es ing pe iod a e 4.2 %, o he egula pe iod 3.3 % o he ini ial in es men . The expec ed ne p esen alue (ENPV) in his scena io is calcula ed in he amoun o 427,713 CZK. The esul s o he o he indica o s a e: NPV = 3,564,278 CZK, DPP = 18 yea s, IRR = 10 %. The aim o his case s udy is o e alua e he echnology in he ield o he en i onmen . The selec ed echnology is he p oduc ion o ene gy om enewable esou ces by means o small hyd oelec ic powe plan s. The me hod o "Expec ed Ne P esen Value" – ENPV was chosen o he e alua ion. Theo e ical calcula ion was desc ibed in he p e ious pa o his pape . 4 Discussion F om he abo e men ioned i is e iden ha he mos op imis ic scena io o ou in es men is scena io No I. Wi hin i s cou se in 30 yea s we gain cash lows a a a e o 1,514,738 CZK, while he o iginal amoun o he in es men was 12 mil. CZK. The calcula ion using he simple NPV me hod is e en mo e op imis ic because acco ding o he ne p esen alue in 30 yea s we acqui e he amoun o 2,704,889 CZK; he discoun ed payback pe iod is hen 19 yea s. The in e nal a e o e u n is highe han he discoun a e, abou 2 %. You can see he o al compa ison o all scena ios in he ollowing Tab. 3. Tab. 3 Scena ios I, II, III and IV Indica o Scena io I Scena io II Scena io III Scena io IV ENPV [CZK] 1,514,738 827,647 9,604 427,713 NPV [CZK] 2,704,889 3,448,528 120,055 3,564,278 DPP [yea s] 19 18 30 18 IRR [%] 9 10 7 10 In con as , he leas ad an ageous op ion ep esen s he scena io No III. In a pe iod o 30 yea s i will b ing us only 9,604 CZK, which is, wi h he ini ial in es men and chosen li e ime pe iod, a e y low amoun . In case his scena io occu s, we should aise he supply o elec ici y o he ne wo k in S age II and III. A he same ime, he e should be a p essu e o educe he annual cos s in he es ing pe iod. Also he o he indica o s (NPV = 120,055 CZK, DPP = 30 yea s and IRR = 7 %) conside his scena io as he wo s , he leas p o i able one. Howe e , we ha e o men ion ha he inal esul s depend on many ac o s, pa icula ly in he annual supplies o elec ici y o he ne wo k, edemp ion p ice, discoun a e and p obabili ies. Acco ding o Synek [12] he decision ee and i s s uc u e a e he mos impo an ac o s in ENPV me hod. In ce ain sec o s i s s uc u e has al eady been ixed (based on se e al yea s o expe ience), in he new sec o s and echnologies i s s uc u e is a om s able so a . 171 Conclusion Technologies a e mo ing he wo ld! Ve y impo an is he connec ion o he echnical concep ions o R&D wi h i s economic aspec s. This pape was ocused mainly on he a ea o echnologies alua ion. Fi s he gene al p ocess o indus ial esea ch and de elopmen was men ioned; he lis o possible me hods o echnologies e alua ion ollowed. In he inal pa he speci ic eal case s udy o he small hyd oelec ic powe plan p ojec alua ion by ENPV was demons a ed. Fou possible scena ios we e p esen ed he e and he bes scena io No I was selec ed. We can claim he e ha he hypo hesis was e i ied: “The companies knowing me hods o echnologies´e alua ion a e p o i able and may help hei egions o achie e any compe i i e ad an age and o s eng hen hei economic posi ion”. In o he wo ds, i he i ms a e able o e alua e hei echnologies by app op ia e me hods, hey become p o i able. I may a ac o he in es o s o he egion, so he economic posi ion o he egion could be s eng hen. 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Pa la Š e mo á ( oz. Řehořo á), Ph.D. 173 OČEKÁVANÁ ČISTÁ SOUČASNÁ HODNOTA - NÁSTROJ EFEKTIVNÍCH INVESTIC Význam ýzkumu, ý oje a ino ací si u ědomuje současné době každý podnika elský subjek soupeřící na hu o konku enční ýhodu. Zde s ojí hypo éza: "Společnos i znající me ody p o oceňo ání echnologií mají pozi i ní ekonomické ýsledky". Ten o příspě ek je zaměřen přede ším na oblas ekonomiky obno i elných zd ojů ene gie, esp. na ocenění yb ané echnologie é o oblas i. Nejp e je ú odu zmíněn p oces p ůmyslo ého ýzkumu a ý oje; následuje ýče možných me od, pomocí k e ých lze oceni ůzné echnologie a zá ě ečné čás i je naznačen konk é ní eálný příklad ocenění p ojek u malé hyd aulické odní elek á ny. Byla z olena me oda ENPV (zah nující ozhodo ací s om, p a děpodobnos a čis ou současnou hodno u); příspě ku jsou u edeny č yři možné scénáře. V zá ě u byl yb án ekonomicky nej ýhodnější scénář a hypo éza byla po zena. DER ERWARTETE REINE NETTOWERT - INSTRUMENT DER EFFEKTIVEN INVESTITIONEN Jedes Un e nehme subjek , das au dem Ma k einen Konku enz o eil ans eb , kenn die Bedeu ung de Fo schung, En wicklung und Inno a ionen. Hie gil die Hypo hese: "Die Gesellscha en, die die Me hoden ü die Bewe ung de Technologien kennen, haben posi i e ökonomische E gebnisse“. Diese Bei ag konzen ie sich o allem au das Wi scha sgebie de e neue ba en Ene giequellen bzw. au eine Bewe ung bes imm e Technologien au diesem Gebie . In de Einlei ung wi d ein P ozess de Fo schung und En wicklung in de Indus ie e wähn . Dann olg eine Übe sich übe die Me hoden, mi Hil e de e e schiedene Technologien bewe e we den können, und abschließend ein konk e es Bewe ungsbeispiel des P ojek es eines kleinen Wasse k a we kes. Es wu de die Me hode des „e wa e en einen Ne owe s“ ausgewähl . Sie en häl En scheidungss uk u , Wah scheinlichkei und einen Ne owe . Im Beispiel we den ie mögliche Szena ien ange üh , dann das ökonomisch o eilha es e Szena io ausgewähl und die Hypo hese bes ä ig . OCZEKIWANA AKTUALNA WARTOŚĆ NETTO - NARZĘDZIE EFEKTYWNYCH INWESTYCJI Znaczenie badań, ozwoju i innowacji uświadamia sobie obecnie każdy podmio gospoda czy walczący na ynku o p zewagę konku encyjną. Tu pojawia się hipo eza: "Spółki znające me ody wyceny echnologii osiągają pozy ywne wyniki ekonomiczne". Niniejszy a ykuł koncen uje się p zede wszys kim na ekonomice odnawialnych ź ódeł ene gii, czyli na wycenie wyb anej echnologii w ej dziedzinie. Najpie w we ws ępie omówiono p oces badań p zemysłowych i ozwoju, po czym p zeds awiono me ody, p zy pomocy k ó ych można wycenić óżne echnologie a w zakończeniu pokazano konk e ny ealny p zykład wyceny p ojek u małej elek owni wodnej. Wyb ano me odę oczekiwanej ak ualnej wa ości ne o (obejmującej d zewo decyzyjne, p awdopodobieńs wo i ak ualną wa ość ne o). W a ykule p zeds awiono cz e y możliwe scena iusze. W części końcowej wyb any zos ał scena iusz najko zys niejszy pod względem ekonomicznym, po wie dzający pos awioną hipo ezę.