Abstract
To prepare the feasibility analysis of the project, a financial investment projection was studied that includes both the project start-up period (years 2007-2010), the reference period accepted for analysis I years 2011-2030 and the operating period economic value of the object including the years that exceed the reference period (years 2031-2049). All the data included in the projections are expressed at fixed prices (without taking inflation into account). The monetary values were expressed in Polish currency. The income tax rate for legal persons was accepted throughout the period at the level of 19%. The forecast was prepared in net prices.
1. Introduction
The analyzed undertaking called Improvement of the sports infrastructure through the reconstruction of the Stadium in RZESZOW consists of carrying out the first stage of reconstruction of the Stadium located in Rzeszow at 69 Hetmanska Street, currently assigned by the Rzeszow City Council to the Stal Institutional Sports Club Rzeszow. As part of the investment, the construction of nine stadium segments (bleachers) is planned at the current facility on the east side of the stadium along with the access roads. The realization of only nine segments (not the entire stadium) is conditioned by the economic possibilities of the City as well as by the accessible allocation of means as part of the Regional Operation Program of the Subcarpathian Voivodeship (RPO WP). The new stands will make it possible to expand the capacity of the stadium by about 4,711 seats for spectators of sports competitions. After the investment is made, the capacity of the stadium will increase to 14,211. The project will also increase the level of safety and driving comfort as well as participation in games and sports competitions, adapting the installation to people’s needs. with disabilities, improve the image of the city, rationalize the operating costs of the facility.
2. Results
2.1. Travel costs: new quantifications
In the analysis of the economic efficiency of the investment studied, the following streams of social costs and benefits will be used: social costs (new quantifications). Private costs include net investment expenses and operating costs. Private benefits include income from operating activities corrected for changes in circulating capital and the residual value of the project at the end of the reference period. External benefits are derived from increased accessibility to the recreation area.
The price of external effects related to the modernization of the stadium was based on the travel cost method (TCM). This method consists of accepting the MTC of the people who go to the recreation area of the Stadium as a measure of value of a non-commercial property. The method therefore assumes that travel costs are an appropriate measure of willingness to pay for the possibility of using a place of recreation. The evaluation of the social effects of the stadium modernization using the travel cost method was carried out on the basis of the costs of the zonal calculations of the trip and the resulting consumer surplus of approximately 73,000 additional accesses to the stadium annually in relation to participation in events organized as a result of the performance. of an investment. As a result, the value of the social benefits resulting from the modernization of the Stadium in the amount of 1,022,287 Polish money has been received.
2.2. Numerical data and essential calculations to determine the residual value (RV) of the investment studied
An essential element of the efficiency account is the discount coefficient (in). When establishing the discounted money flows on investments in their calculations, the discount rate of 5% has been considered, while the costs and social costs of making the investment studied have been used the discount rate at the level of 5 ,5%.
RV = (1 + q) NCFm / rq (1)
Where:
RV – residual value,
NCFm – cash flows in the calculation period of the last year,
r – discount rate,
q – projection period of constant growth rate of net cash flow (NCFm),
RV = 5,289,979 / 0.3418 = 15,474,569
The evaluation of the efficiency of social investments called macroeconomic evaluation consists of examining all the costs and benefits related to the investment environment, taking into account the influence on the natural and cultural environment of man and the socioeconomic phenomena that accompany entrepreneurship. Said evaluation must constitute an essential element in evaluating the efficiency of investments, especially those financed by public and public-private means. Among the macroeconomic methods of the investment efficiency account, the most popular is the cost analysis and social benefit (CBA – Cost Benefit Analysis) method. The results of the cost benefit analysis can be expressed in many ways, in this case in the net economic value (ENPV) and the economic rate of return – ERR.
The net economic value ENPV reports on real economic benefits (estimated in money), which will be contributed by making an investment.
We will evaluate it based on the following formula (2):
ENPV = in St (2)
Where:
St – balances of flows of economic costs and social costs generated by a project in particular years of the accepted time horizon
at – discount coefficient, calculated according to the formula at = 1 / (1 + r) t.
The economic rate of return is the discount rate for which the net economic value equals zero. The economic rate of return will be evaluated from the following pattern (3):
ERR = r1 + (EPV (r2 – r1) / EPV + | ENV |) (3)
Where:
EPV – positive value ENPV for a lower discount rate r1.
ENV – negative ENPV value for higher discount rate r2.
To evaluate the efficiency of an investment for society, the project’s updated economic net value method (ENPV), the economic rate of return (ERR) and the benefit-cost ratio (BCR) have been used.
As the first, the updated economic net value of the project was marked. To calculate the ENPV, the net cash flows must first be established on the basis of the social benefits related to the investment. The money flows were established using the formula NCFt = Dt – Kt. In the last year of the accounting period, the value increased around the residual value of the facility at the end of 2030 years.
3. Conclusion
Based on the assumptions presented, the Stadium operator’s financial plan was prepared for the activity directly related to its use. The plan includes the operator’s balance, especially his positions that are indispensable for drawing up the demand on net working capital, the profit and loss account, and the cash flow account. The most important assumptions of the forecast are presented.
Knowing the results of the calculation of the net monetary flows, calculate the level of net economic value of the studied enterprise. The formula was used to calculate the ENPV. From the calculations it follows that the updated economic value of the investment holds 2,064,871.31 Polish coins. From the foregoing it follows that the investment analyzed is effective, because the modernized economic net value set for the entire accounting period is greater than zero.
