Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/174143 
Year of Publication: 
2016
Citation: 
[Journal:] UTMS Journal of Economics [ISSN:] 1857-6982 [Volume:] 7 [Issue:] 1 [Publisher:] University of Tourism and Management [Place:] Skopje [Year:] 2016 [Pages:] 49-59
Publisher: 
University of Tourism and Management, Skopje
Abstract: 
Economic life of achieving economic and financial effects of an investment opportunity presents the period in which selected investment option remains economically superior from the other alternative investment opportunity. Time period in which the investment project needs to prove its justification, presents an extremely critical factor in the profitability of the investment project, therefore, special attention must be paid to the assessment of the economic and financial time period. The aim of this study was to prove that critical factor in achieving profitability is in direct relation with economic or financial life. The results which arise from this study suggest on the fact that during analysis investor must determine financial life to achieve economic and financial effects of capital investment, because the length of the economic life does not have to match the profitability or with financial efficiency, and that is not appreciated sufficiently in practice. This paper presents examples of calculating the financial profitability of capital investment, using the residual value, ie the discounted residual value and the results of empirical studies that show the difference in preference of life effectuation of capital investment between theoreticians and practitioners in the field of capital budgeting.
Subjects: 
net cash flow
discounting
economic life
financial life and residual value
JEL: 
G31
Document Type: 
Article

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