Inflation Investment
INFLATION INFLUENCE ABOUT INVESTMENT DECISION
Associate Professor PhD Dorel Berceanu, dorelberceanu@yahoo.com Associate Professor PhD Anca Băndoi, anca_bandoi@yahoo.com University of Craiova ABSTRACT: In this article, we are dealing with an issue very important as regards the investment decision, namely the influence that it has on inflation. Thus, in a brief introduction spotlighted how we have perceived inflation today, what it means and how it manifests itself. An ample space in the paper is dedicated manner of determining the net present value in the presence of inflation, with an emphasis on the link between the real interest rate, the nominal interest rate and the inflation rate. To be convincing in our approach we introduced in the last part of the paper a case study in which we showed how affects inflation on investment decisions, in practical way.
Keywords: investment, decision, inflation, cash flow JEL Codes: G 31
Introduction The activity of investment in a company is based strategy of economic development set at the level it held and based investment programs or projects. The investment, regardless of which will be developed within a company, the details in order to implement them in more investment projects. The project investment is defined as a complete and autonomous action involving the achievement of its investment and exploitation of its long life. Therefore, the establishment and use of fixed assets represent the implications of that production on the company, one of the basic elements of the financial mechanism of it. An essential factor of policy continuity and growth of business investment company is contributing to the construction or purchase of assets of production and marketing. Realization of investments requires significant funding needs, leading to impairment of long-term. Therefore, the efficiency of investment projects should be compared with the yield on the investment capital. Given the risk embedded, the decision of
Associate Professor PhD Dorel Berceanu, dorelberceanu@yahoo.com Associate Professor PhD Anca Băndoi, anca_bandoi@yahoo.com University of Craiova ABSTRACT: In this article, we are dealing with an issue very important as regards the investment decision, namely the influence that it has on inflation. Thus, in a brief introduction spotlighted how we have perceived inflation today, what it means and how it manifests itself. An ample space in the paper is dedicated manner of determining the net present value in the presence of inflation, with an emphasis on the link between the real interest rate, the nominal interest rate and the inflation rate. To be convincing in our approach we introduced in the last part of the paper a case study in which we showed how affects inflation on investment decisions, in practical way.
Keywords: investment, decision, inflation, cash flow JEL Codes: G 31
Introduction The activity of investment in a company is based strategy of economic development set at the level it held and based investment programs or projects. The investment, regardless of which will be developed within a company, the details in order to implement them in more investment projects. The project investment is defined as a complete and autonomous action involving the achievement of its investment and exploitation of its long life. Therefore, the establishment and use of fixed assets represent the implications of that production on the company, one of the basic elements of the financial mechanism of it. An essential factor of policy continuity and growth of business investment company is contributing to the construction or purchase of assets of production and marketing. Realization of investments requires significant funding needs, leading to impairment of long-term. Therefore, the efficiency of investment projects should be compared with the yield on the investment capital. Given the risk embedded, the decision of