Flow of investments

In addition to limited capital, at the present time there are other barriers that impede the flow of investment capital into industrial energy conservation. 

In the petroleum sector as well as the gas industry, the problem of lack of foreign investments is very serious. It is necessary to note that the flow of investments in Russia was never large during the years of reforms, in comparison with China and other former socialist countries. Investment is necessary for the energy sector of the economy, though this money and this amount of the joint projects is obviously not sufficient to extricate the sector from crisis. The reasons for the small cash flow are related to both economic and political situations in Russia as well as the absence of a leader among the oil companies in the petroleum sector. 

The information we retrieved are the date of the transaction, the name and nationality of the target firm and of the ultimate parent, the SIC codes of the firms involved, the percentage of shares acquired, and R D expenditures. Flows of investment are described in terms of number of transactions reported in the database. This is obviously an imperfect measure of FDI, as it does not take into account the cost of the acquisition and the turnover of the target company. Nevertheless, it is possible to describe the changes in relative flows of investments, and how the presence of European and American firms has changed over time in the main regions of the world. 

Float public stock offerings when the market is high (but never ceding control), and buy back when the market is low. The proceeds of the stock offerings are used to pay down debt, part of which was issued previously to buy back stock. Unlike many financial investors who usually take companies public in order to pocket the proceeds. Huntsman uses this financial technique to strengthen its balance sheet and add to its flow of investment funds from depreciation and retained earnings. 

From an overall economic viewpoint, any investment proposal may be considered as an activity which initially absorbs funds and later generates money. The funds may be raised from loan capital or from shareholders capital, and the net (after tax and costs) money generated may be used to repay interest on loans and loan capital, with the balance being due to the shareholders. The shareholders profit can either be paid out as dividends, or reinvested in the company to fund the existing venture or new ventures. The following diagram indicates the overall flow of funds for a proposed project. The detailed cash movements are contained within the box labelled the project . 

Flow rate, Ib/h (kg/h) Conveyor pipe, inside diameter, in (mm) Power required, hp Range of investment, f ... 

Now that you have determined the likely savings in terms of annual process and waste-treatment operating costs associated with each option, consider the necessary investment required to implement each option. Investment can be assessed by looking at the payback period for each option that is, the time taken for a project to recover its financial outlay. A more detailed investment analysis may involve an assessment of the internal rate of return (IRR) and net present value (NPV) of the investment based on discounted cash flows. An analysis of investment risk allows you to rank the options identified. 

Net future worth NFW , Simple. When plotted as cash-flow diagram, shows timing of investment and income Takes no account of the time value of money... 

A company has the option of investing in one of the two projects A or B. The capital cost of both projects is 1,000,000. The predicted annual cash flows for both projects are shown in Table 2.14. For each project, calculate the ... 

Suppose project C has a 20-year life and a yearly after-tax cash flow of 48,000 for an initial investment of 300,000. Project D has a 5-year life, with a yearly cash flow of 110,000 for an initial investment of 300,000. Compare the internal rate of return and net present value (for i = 0.08) for each option. 

The financial heart of a biotech story is a positive risk-adjusted net present value (rNPV). If the projected payback could happen very quickly, and if investors regarded a business plan as a sure thing (risk-free), then the "value" of the story would simply be the payback minus the investment. However, biotech paybacks do not happen quickly and are certainly not risk free. Hence, investors discount the payback value to reflect (1) the time value of their money and (2) the risk of failure. If discounted payback values are thought to exceed the required investments, stories get funded if this rNPV is perceived as negative, the flow of money stops. 

Payout Period Plus Interest Payout period (POP) is the time that will be required to recover the depreciable fixed capital investment from the accrued after-tax cash flow of a project with no interest considerations. In equation format... 

Rate of return on investment The efficiency ratio relating profit or cash flow to investment. 

Other parameters are more difficult to calculate. However, they can be very much more useful because they take into account two other important aspects. Firstly, the pattern of flow of money into and out of the business (cash-flow) since items of income (revenue) and expenditure (outgoings) can vary a lot with time. For instance, as can be seen in Figure 13.5, initially expenditure greatly exceeds income, whereas later on once the plant is operating and product is being sold income exceeds expenditure. Secondly there is the time value of money , that is money received now is more valuable than the same sum of money received in a years time, as it can be invested and interest will have accmed on it by the end of the year. Hence, early income to a business is valuable as it can be invested in the business and so saves having to borrow money to buy equipment, pay wages, etc. Thus the value of money is not completely absolute, but is a function of time. 

A major opportunity for savings is to reduce the flow of diluent or carrier gas (often air or nitrogen) at the source. For a gas stream containing both particulates and halogenated volatile organic compounds (VOCs), the minimum capital investment to abate this stream is about 75 per standard cubic foot per minute (scfm) of waste gas flow. 

The pumping energy that is invested to overcome the valve differential is wasted energy. The amount of this waste is the difference between the pressure required to "push" (transport) the fluid into the process (see AP in Figure 2.60) and the pump curve of the constant-speed pump. Pumps are selected to be able to meet the maximum possible flow demand, and therefore, most of the time they operate at partial loads. Consequently, using control valves to manipulate the flow of constant-speed pumps wastes energy and thereby increases operating cost. 

R. PASSMAN I think the suggestion was made that each company decide what it needs in order to go commercial. That could be a capital grant or an investment tax credit or whatever it might be. But if, in their own calculations, that gave them a requisite return on investment or a discounted cash flow of some form that they needed and they received, because of all those that came in, that happened to be the best deal for the government then there was a match and therefore they ought to proceed with it. If they lost their shirt or other parts of their anatomy, it would be their own fault. 

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