Determining the economic viability of the capital investment allows estimating. The cost-benefit ratio of the project to be undertaken. Thus facilitating the decision-making process and contributing to the assertive selection of those optimal choices. That guarantee the achievement of the objectives. at the lowest possible risk. In this sense, this essay aims to highlight. From a theoretical contact number list with name. The criteria under which an investment project should be evaluated. In order to have a clearly defined perspective regarding its economic viability.
Fundamentals of financial mathematics
Gómez (2001) defines financial mathematics as “a set of techniques. And procedures of a quantitative nature that serve to calculate the equivalence of the value of money at any moment in time” (p.13). From this it follows that financial mathematics has as its main objective. To estimate in “monetary” terms, the value of money over time. In order to facilitate the process of evaluating and comparing investments. The foregoing also implies that the value of money over time is really something subjective. Since this “value” is not given by what it actually represents, but by what can actually be acquired with it, that is, what which in economic terms is known by the name of “purchasing power” or “real value”.
The net present value (NPV) criterion
Morales (2018) maintains that the net present value is “an investment criterion that consists of updating the receipts and payments of a project or investment to know how much is going to be gained or lost with that investment” (p.3). Analyzing this argument, the net present value comprises a tool that allows the investor to make sound and precise financial decisions, since based on the results obtained, it has the advantage of rigorously evaluating and/or comparing various investment alternatives. DV Leads order to identify the one that generates the highest possible profitability, or even predict if, in fact, all the possibilities in which it is to invest will not generate any type of economic benefit.