Efficiency evaluation of investment in expanding the capacity of the rubber industry company

Abstract

The aim of this paper is to determine and evaluate the economic efficiency of investment of the company from the field of rubber industry in the injection molding press and tool, with which the company expands the capacities intended for the production of rubber seals. The effects of the investment were estimated using the payback period, as a static method of investment efficiency evaluation, as well as the net present value and profitability index, as dynamic methods. In addition, in paper was used sensitivity analysis, as a method for evaluation of investment in conditions of uncertainty. The obtained results showed that the payback period of the investment is 2.93 years, while the net present value of the investment is 149,914 euros, and the profitability index is 1.79. All the obtained results indicate that the investment should be implemented. In addition, the sensitivity analysis, whose focus was primarily to consider the impact of increased material costs, on the results of the investment evaluation methods used, showed that the project is acceptable in all considered cases, because it contributes to increasing value of the company.