What is an investment project?
Investment project is an allocation of resources with expectations of profitable return on allocation in the future. The return is usually expected to be more than a year in the future. The allocation of resources that cause revenues that benefit in the current year are only an expenditure on operating costs. One of the basic elements of the investment project is the fact that the investment is tied in a long -term than short -term.
When a person has excessive sources like money, he usually wants to do something about these sources so that they can be as useful for him. Ideally, most of the excess of a person should be used correctly to create the greatest advantages. For example, if a person has a recreation house that can rent during the weeks when he does not use it, it would often be better to allocate excess sources than to let the house sit empty. Renting a house generates money or return on investment made in Propertuy, it goes beyond the pleasure of the owner when it is there.
Investors do not necessarily choose to use for excess resources that create the highest yield. Some investors have different priorities and may need excess resources to be immediately accessible, for example, than generating the most money. However, the investment project is the possibility to allocate excessive resources on the long -term horizon with the expectation that the investment will remain in the project until it reaches a stable phase of income generation and can return investors back.
These types of projects are evaluated on the basis of viability. The investment project will offer an attractive interest rate that makes the investor's money loan is useful and the investor is in time and the director is return. The suitability of the project will often depend on its abilities of disadvantages, generate positive cash flows to meet these obligations.
In some cases, the return on the allocation of resources to the investment project is in benefits rather than money. For exampleThe investment project is an investment in real estate. This property is evaluated on the basis of the rent it can generate and the return on investment is expected in the form of money. Investing in the education or training of a person, on the other hand, brings an advantage rather than a direct return of cash. This type of investment project in human resources is designed so that it has different types of revenues that solve non -monetary objectives and goals of the investor.