THE IMPORTANCE OF THE DISCOUNTING METHOD IN INVESTMENT ANALYSIS
Keywords:
Discounting method, investment analysis, discounted cash flow, Net Present Value (NPV), Internal Rate of Return (IRR), investment efficiency, time value of money, discount rate, financial risk, capital budgeting, investment project evaluation, profitability analysis.Abstract
This article examines the importance of the discounting method in investment analysis and its role in evaluating the efficiency of investment projects. The study analyzes the economic essence of discounting, the theory of the time value of money, and the application of discounted cash flow methods in financial decision-making. Particular attention is paid to key investment evaluation indicators such as Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Discounted Payback Period (DPP). The research also evaluates the impact of discount rates on investment profitability and financial risk assessment. Based on theoretical approaches and international financial practices, the article demonstrates that discounting methods improve the accuracy of investment analysis and contribute to more effective capital allocation under conditions of economic uncertainty.
