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To prepare the feasibility analysis of the project, a financial investment projection was studied that includes both the start-up period of the project (years 2007-2010), the reference period accepted for the I analysis, years 2011-2030, and the period of operation. of the object including years that are beyond the reference period (years 2031-2049). All data included in the projections are expressed in fixed prices (without taking into account inflation). Monetary values were expressed in Polish money. The profitable tax rate of legal entities 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 ceded by the Communal City of Rzeszow to the Institutional Sports Club Stal Rzeszow. As part of the investment, nine stadium segments (stands) are planned to be built in the current facilities on the east side of the stadium along with access roads. The realization of only nine segments (not the entire stadium) is conditioned by the City’s financial possibilities, as well as the accessible allocation of means as part of the Subcarpathian Voivodeship Regional Operation Program (RPO WP). The new stands will allow the capacity of the stadium to be increased by some 4,711 seats for spectators of sports competitions. After the completion of the investment, the capacity of the stadium will increase to 14,211. The completion of the project will also make it possible to increase the level of driving safety and comfort, as well as participation in sports games and competitions, adapt the facility to the needs of the people 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 flows of social costs and benefits social costs (new quantifications) will be used. Private costs include net investment expenses and operating costs. Private benefits include income from the operating activity corrected for changes in working capital and the residual value of the project at the end of the reference period. External benefits are benefits resulting from increased accessibility to the recreation site.
The price of the external effects related to the modernization of the Stadium was based on the travel cost method (TCM). This method consists of accepting the TCM of the people who go to the Stadium recreation area as a measure of the value of the non-commercial good. Therefore, the method assumes that travel costs are an appropriate measure of the willingness to pay for the possibility of using the 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 zonal calculations of the travel costs and the resulting consumer surplus of approximately 73,000 additional approaches to the Stadium annually in relation to participation in events organized as a result of making an investment. As a result, the value of social benefits resulting from the modernization of the Stadium worth 1,022,287 Polish money has been received.
2.2. Numerical data and calculations essential to determine the residual value (RV) of the investment studied
An essential element of the efficiency account is the discount coefficient (at). When establishing the discounted money flows related to the investments in their calculations, the discount rate of 5% has been considered, when analyzing the costs and social costs of carrying out the investment studied, the discount rate has been used 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 – constant growth rate of the net cash flow projection period (NCFm),
LR= 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 environment of the investment, taking into account the influence on the natural and cultural environment of man and the socioeconomic phenomena that accompany the investment. entrepreneurship. Such evaluation must constitute an indispensable element of the evaluation of the efficiency of the investments, especially those financed with public and public-private means. Among the macroeconomic methods of the investment efficiency account, the most popular is the Cost-Benefit Analysis (CBA) method. The results of cost/benefit analysis can be expressed in many ways, in economic net value (ENPV) and economic rate of return – ERR.
The net economic value ENPV informs about the real economic benefits (estimated in money) that the realization of an investment will bring.
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 based on 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 value ENPV for a higher discount rate r2.
To evaluate the efficiency of an investment for society, the project’s net economic value method (ENPV), the economic rate of return (ERR) and the benefit-cost ratio (BCR) have been used.
As the first one, the updated net economic value of the project was marked. To calculate the ENPV, the net cash flows must first be established based on the social benefits related to the investment. Money flows were fixed using the formula NCFt= Dt – Kt. In the last year of the accounting period the value increased over the residual value of the facility at the end of the 2030s.
3. Conclusion
Based on the assumptions presented, the financial plan of the operator of the Stadium was drawn up for the activity directly related to its use. The plan includes the operator’s balance sheet, especially its essential positions to prepare the demand on net working capital, the profit and loss account and the money flow account. The most important assumptions of the forecast are presented.
Knowing the results of the calculation of net money flows, calculate the level of net economic value of the company studied. To calculate the ENPV, the formula was used. From the calculations it can be seen that the updated economic value of the investment holds 2,064,871.31 Polish money. From the foregoing, it follows that the investment analyzed is effective, because the modernized net economic value set for the entire accounting period is greater than zero.