Through the investigation, analysis, and prediction of the market capacity, supply and demand, price, and competition pattern of the project's output products, input products, or services, we provide the basis for determining the project's target market, construction scale, and product plan. Through market forecast analysis, requirements are put forward for the selection of raw materials, technology and equipment for the project. Based on the target market determined by market forecast and analysis, provide a reference for project financial analysis and economic analysis to determine product (service) prices and transportation costs.

For projects that are smaller in scale and have a more certain market, the focus is on analyzing the regional market or target market. The feasibility study report should conduct a forecast analysis of the market supply and demand conditions, price trends and competitiveness of the main products. For projects such as technological transformation and reconstruction and expansion projects where the product increment is not large and the impact on the original market is small, the content of the forecast analysis can be appropriately simplified. For products with large project scales and fierce market competition, emerging products and products with market uncertainty, special research should be conducted on market forecast analysis. For raw materials, fuel, and power that have a greater impact on the project, a special market forecast report should be prepared when necessary.

(1) Product usage

(2) Foreign market forecast analysis

(3) Domestic market forecast analysis

For major inputs including services such as raw materials, fuel, and power that are important, have a large impact, have gaps in supply or are in monopoly, supply analysis should be conducted and supply and demand balance forecasts should be made. In our country, water resources are scarce. In some water-scarce areas, water balance analysis is required for large-scale water-use projects. (1) Current supply status of major inputs; (2) Forecast of supply and demand balance of major inputs.

(1) Target market analysis

(2) Analysis of the advantages and disadvantages of product competitiveness

For project products with large scale and fierce market competition, marketing strategy research should be conducted when necessary, mainly studying the marketing strategies that should be adopted for the target product to enter the market and expand sales share. General investment projects do not need to conduct marketing strategy analysis.

(1) Product price status and forecast (2) Price status and forecast of main raw and auxiliary materials, fuel and power

(1) Identification of risk factors (2) Risk assessment (3) Risk countermeasures and feedback

The product plan (also called product outline) is the combination plan of the leading products, auxiliary products or by-products of the proposed project and their production capabilities, including product variety, output, specifications, quality standards, process technology, materials, performance, uses, prices, Domestic and foreign sales ratio, etc. Product plans need to be formed based on product portfolio research.

Construction scale, also called production scale, refers to the production or service capacity that the project may achieve in the set normal operating years. Propose two or more alternative construction scales, and recommend a reasonable construction scale after technical and economic comparison.

(1) Construction scale and product plans (2) Characteristics of technical transformation projects

Technical solution research is to determine the production technology, process flow, production formula and production method, production process control, operating procedures and program data of the proposed project through investigation and research, expert demonstration, solution comparison, preliminary technical exchange and inquiry, in order to Ensure that the production process is safe, environmentally friendly, energy-saving, reasonable, smooth and orderly.

Technical equipment source plans include technology source plans and equipment source plans.

For large-scale combined devices composed of multiple sets of process devices, a separate volume of process devices should be prepared to describe the process technology in detail. For renovation, expansion and technical transformation projects, the original process and technology status should be described, the relationship between the project construction and the original equipment should be explained, and relevant content should be compiled based on the specific conditions of the transformation.

(1) Selection of process technology solutions (2) Process flow and consumption quota (3) Main equipment selection (4) Automatic control (5) Installation of public engineering facilities within the boundary

(6) Discharge and pretreatment of "three wastes" from process equipment

(7) Equipment area, building and structure area and capacity

(8) Process technology and equipment risk analysis

1. Geological hazard risk assessment

2. Preparation content of construction conditions and site (factory) site selection

(1) Preparation content and requirements of the overall layout

(2) Contents of the general layout preparation

When the newly built factory covers a large area, or the natural terrain has a large slope, or there are special requirements in construction, production, transportation, etc., a vertical plan comparison should be made. Propose the recommended vertical layout plan and fortification instructions. Propose factory flood control standards and measures, ground drainage methods, earthwork quantities, etc.

Briefly describe the main project quantities including land area, road length, earth and stone volume, etc., and list the main project quantities.

Explain the total cargo throughput, discuss the principles for selecting transportation methods, determine the transportation plan based on the transportation volume of the entire plant and the attributes, forms and physical properties of various materials, compare the main material transportation plans, and list the options for using different transportation methods. Transport volume. Based on the current market conditions and the characteristics of the region where the factory is built, we should rely on social transportation forces as much as possible. ​Explain the basic situation of the transportation plan. When selecting roads and vehicles in the factory, the roads in the factory should be separated for people and goods. Road transport, road grade and length, seasonal effects on traffic, road network represented by map.

For large-scale petrochemical projects, oil refining projects, coal and other mineral mining, transportation hubs or projects with large storage capacity, storage and operation are an important part and must be specially studied and discussed.

Explain the laying methods of pipelines and compare and select solutions. Lists are compared when necessary. Generally, when small and medium-sized projects or pipeline networks account for a small proportion of investment, this part of the content can be simplified. General projects can be simplified appropriately.

1. Engineering plan

2. System supporting projects

3. Service project preparation content 4. Living welfare project preparation content

5. Off-factory supporting projects

(1) Current status and analysis of environmental quality in the project area (2) Current status and analysis of environmental protection in enterprises (industrial parks)

(1) Wastewater (2) Waste gas (3) Solid waste and waste liquid (4) Noise (5) Others The summary list explains the emission of vibration, electromagnetic waves, radioactive substances and other pollutants from each device (unit) or facility, including pollution sources, quantity, intensity, emission characteristics and treatment measures.

Briefly describe the investment project's implementation of the principles of clean production, circular economy, energy conservation, emission reduction, and environmental protection, and the environmental protection and management measures and comprehensive utilization plans adopted in the entire process from source control to terminal treatment, and analyze and explain the expected effects. (1) Wastewater treatment (2) Waste gas treatment (3) Solid waste (liquid waste) treatment (4) Noise control (5) Environmental risk prevention measures (6) Other measures

(1) Environmental management (2) Environmental monitoring

Analysis of dangerous and harmful factors that may occur during the production process, including: (1) Characteristics analysis of dangerous goods (2) The first batch of dangerous goods under key supervision (3) The first batch of dangerous production processes under key supervision (4) Analysis of major hazard sources ( 5) Analysis of dangerous and harmful factors that may occur during the production process Analysis of environmental hazard factors, including: (1) Analysis of natural hazard factors (2) Analysis of surrounding environmental hazard factors

(1) Analysis of occupational hazard factors in the surrounding environment (2) Analysis of occupational hazard factors and occupational diseases that may occur during the project production process (3) Analysis of parts and personnel that may be exposed to occupational disease hazards

Describe the fire protection facilities and cooperation conditions of units and fire departments near the project, and propose possible possibilities that can be relied upon. According to the physical properties of the raw materials, intermediate products and finished products of the project, explain the fire hazards in various aspects such as storage, production process, transportation process, etc. According to the operation characteristics of process production and auxiliary facilities, explain the fire hazards in each production location, building, factory, etc. Fire hazard. Based on the fire risk, determine the fire risk category of each item of the project and display it in a list. Describe the fire prevention measures adopted and the fire protection system configured, including: (1) Fire prevention measures for each profession 1) Process 2) General drawing 3) Construction 4) Electrical 5) Heating and ventilation (2) Fire protection system 1) Water fire protection system 2) Other fire protection systems such as automatic water sprinkler, water spray system, fixed and semi-fixed foam fire extinguishing system, gas fire extinguishing system, dry powder fire extinguishing system, steam fire extinguishing system and fire alarm system selection and a brief description of the plan. 3) Fire drainage

List the main laws, regulations and design standards that the project should comply with, including the country, the government where the project is located, the industry and enterprises where the project is located Standards etc. Foreign investment should comply with relevant laws and regulations of the country or region, industry and locality where the project is constructed. List the types and quantities of energy required for the project. Briefly describe the characteristics and rationality of energy utilization. Technical transformation and reconstruction and expansion projects must provide the energy consumption status of existing devices. Briefly describe the energy supply situation, analyze energy sources, supply capabilities, supply plans, long-term supply stability, and evaluate projects in terms of volume and price satisfaction, existing problems and risks. Describe the project energy-saving analysis and measures. List the main energy consumption and convert energy consumption. Calculate the energy consumption of the project's output value per 10,000 yuan or industrial added value. Calculate the unit product energy consumption indicators of major products. According to the specific conditions of the project, the comprehensive energy consumption of the project unit product or the customary comparable energy consumption indicators are compared with the industry or local indicators, and the project is systematically compared with the industry or local indicators. The software should be compared with the advanced level at home and abroad to explain its gap or advancement. For projects where the product can be used for energy, the energy conversion efficiency should be calculated. Analysis of energy consumption, including: (1) Whole plant energy consumption composition and analysis Technical transformation and reconstruction and expansion projects should be compared according to "with projects" and "without projects". Analyze the impact on the overall energy consumption level of the enterprise after the completion of the project. (2) Analysis of energy consumption per unit product

List the main laws, regulations and design standards that the project should comply with. List the types and quantities of water resources required for the project. Briefly describe the characteristics and rationality of water resources utilization. For technical transformation and expansion projects, the water status of existing devices must be given. Briefly describe the water supply situation, analyze water sources, supply capacity, supply plans, long-term supply stability, satisfaction with the project in terms of quantity and price, existing problems and risks. According to the specific conditions of the project, start from the overall optimization of the project and explain the rationality of the overall water use and water resource utilization of the project. List and analyze water consumption indicators, including: (1) Water consumption index 1) List the project’s fresh water consumption; 2) The project’s water consumption per 10,000 yuan of output value or industrial added value; 3) The unit product water consumption index of the main products; 4) Water reuse rate; 5) Cooling water circulation rate; 6) Fresh water consumption Water utilization coefficient; 7) Wastewater reuse rate. (2) Water consumption analysis Analyze the potential for water saving based on the composition and characteristics of water use in the project. Based on the specific conditions of the project, the comprehensive water consumption of the project unit products or the customary comparable water consumption indicators should be compared with the industry or local indicators. If possible, it should be compared with the domestic and foreign advanced levels to explain the gap or advancement. Water metering and management: describe the configuration and management of water metering instruments in the project.

(1) Human resource allocation

(2) Advance entry and employee training

(1) Enterprise management system and organizational structure (2) Production shift system and human resource allocation (3) Personnel training and placement

Projects in which state-owned funds hold a controlling or dominant position that require bidding according to law shall be subject to public bidding; however, if one of the following circumstances occurs, bidding may be invited: (1) The technology is complex, has special requirements or is restricted by the natural environment, and there are only a small number of potential bidders to choose from; (2) The cost of using public bidding accounts for a large proportion of the project contract value. For projects involving national security, state secrets, emergency rescue and disaster relief and other special circumstances that are not suitable for bidding, bidding may not be conducted in accordance with relevant national regulations. In any of the following circumstances, bidding may not be conducted: (1) Irreplaceable patents or proprietary technologies need to be used; (2) The purchaser is able to construct, produce or provide it on his own in accordance with the law; (3) The investor in the franchise project selected through bidding is able to construct, produce or provide it on his own in accordance with the law. Provide; (4) Projects, goods or services need to be purchased from the original winning bidder, otherwise construction or functional supporting requirements will be affected; (5) Other special circumstances stipulated by the state.

The key to implementing the agency construction system is to choose a good agency construction unit. In principle, agency construction projects should be constructed through competitive bidding or shortlist assessment, from which professional project management units are selected and constructed; individual projects with complex technology, strong professionalism, and special requirements can also be constructed with the approval of the government investment department. The construction agency is selected through direct entrustment. The construction agency should generally be determined after the project feasibility study report is approved. After the construction agent is determined, a three-party contract between the client, the construction agent and the user should be signed; if there is no specific user unit or the user unit has not yet been established, a two-party contract can be signed. The construction agency contract should clearly stipulate the rights, obligations and responsibilities of each party. The construction agent shall submit a performance guarantee letter issued by a bank or professional guarantee institution to the client.

(1) Construction period (2) Project implementation progress and plan preparation content 1) Project organization and management 2) Implementation progress plan 3) Project bidding content 4) Contents of agency construction system ① Selection criteria and requirements for agency construction units; ② Selection process of agency construction units; ③ Determination of the construction agency method; ④ Explanation of rejection of bidding or inappropriate bidding. 5) Main issues and suggestions

Financial analysis mainly examines the benefits of the project from the perspectives of enterprises (financial entities) and investors. Since corporate interests are not always completely consistent with national and social interests, the financial profitability of a project may not fully and correctly reflect the economic rationality of the project in at least the following aspects: (1) The state provides project subsidies; (2) Enterprises pay taxes to the state; (3) Possible distortions in the market prices of certain goods; (4) External effects of the project (indirect benefits and indirect costs). Therefore, it is necessary to conduct an economic analysis of the project from the perspective of the project's contribution to the increase in social resources and the increase in social resource consumption caused by the project, in order to correctly reflect the project's net contribution to social welfare.

(1) Implement restrictions on projects that have good financial benefits but poor economic benefits (2) Encourage projects that have poor financial benefits but good economic benefits

The main report for economic cost benefit analysis is the "Project Investment Economic Cost Benefit Flow Statement". Auxiliary statements generally include a construction investment adjustment estimate form, a working capital adjustment estimate form, an operating income adjustment estimate form and an operating expense adjustment estimate form.

Calculate the economic net present value (ENPV) and economic internal rate of return (EIRR) indicators through the "Project Investment Economic Cost Benefit Flow Statement".

According to the specific conditions of the project, identify the sensitive factors of the project, select the change rate of each sensitive factor, and calculate the impact on the project's profitability.

(1) The direct benefit of a transportation project is reflected in the time saving effect, which can be calculated based on the specific conditions of the project. (2) The output effects of education projects, medical and health care projects, etc. are expressed as impacts on human capital, life extension or disease prevention, etc., which can be calculated according to the value of added value of human capital, the value of possible reduction of deaths, and the reduction of diseases. Value estimation methods for improving health, etc. and calculating based on the specific circumstances of the project. (3) The direct benefits of water conservancy project projects include flood control benefits, sedimentation reduction benefits and power generation benefits, etc., which can be estimated separately according to the specific conditions of the industry and project.

The basic indicator of cost-effectiveness analysis is the effect-to-cost ratio (RE/C), which is the effect achieved per unit cost. It is also customary to use the cost-effectiveness ratio (RC/E) indicator, which is the cost per unit effect.

(1) An important basis for project decision-making. (2) Plays an important role in the selection of project plans. (3) Cooperate with investment parties in negotiations and promote equal cooperation. (4) Financial viability analysis in financial analysis plays an important role in the decision-making of non-profit projects, especially in the examination of the financial sustainability of non-operating projects and social welfare projects. (5) Financial analysis can serve as an important foundation and basis for economic analysis.

For operating projects, the financial analysis content should include all the content mentioned in this chapter; For non-operating projects, understand the financial status, analyze its financial sustainability and viability, so as to take necessary measures to make the project balance its financial balance and operate normally.

(1) Basis and explanation of cost and expense estimates 1) Relevant laws, regulations and documents in the region or country where the project is located; 2) Relevant regulations and documents of the company or enterprise; 3) Relevant reference information and data sources; 4) Contracts, agreements or intentions from relevant parties; 5) Explain the basis used. (2) Cost and expense estimation The cost and expense estimation methods mainly include the production factor estimation method and the manufacturing cost plus period expense estimation method. (3) Cost and expense analysis

(1) Sales revenue estimation The basic data for sales revenue estimation include the quantity and price of products or services. (2) Tax estimation The taxes and fees involved in selling products or services mainly include: value-added tax, consumption tax, resource tax, urban maintenance and construction tax, education surcharge, local education surcharge, etc.

(1) Basis and explanation of financial analysis.

(2) Financial analysis statements

(3) Financial analysis indicators

"With or without comparison" is one of the basic rules of feasibility studies. Renovation, expansion and technical transformation projects are typical projects that use the "with or without comparison" analysis method. For a newly established legal person project, both "No Project" and "Current Status" are zero. The "Project" status is the target of the proposed project. At this time, the data of "New", "Increment" and "Project" are all the same. Existing project legal person projects, within the determined project scope, if the "status quo" remains unchanged in the "no project" state, and the "existing project" does not have a direct impact on the "status quo", then "new" will be added at this time Equivalent to "increment". Accurately analyzing the "no project" status and defining the project scope are the keys to the "with or without comparison" analysis.

When conducting financial analysis of foreign investment projects, attention should be paid to the impact of different applicable laws and regulations on financial analysis, and tax policies and other preferential conditions and price policies should be investigated.

When conducting financial analysis of overseas investment projects, attention should be paid to the impact of different applicable laws and regulations on financial analysis, and accounting standards (policies), tax policies, etc., as well as various preferential conditions and price policies should be investigated. Pay attention to cost calculations, profit distribution regulations and requirements, etc.

The third edition of "Economic Evaluation Methods and Parameters of Investment Projects" by the National Development and Reform Commission and the former Ministry of Construction specifically introduces the characteristics and evaluation methods of project evaluation in non-industrial special industries. Financial analysis of non-industrial projects should refer to the provisions of the third edition. implement.

Other special projects include scientific research and development projects, industrialization projects, etc., safety, environmental protection, equipment update projects, etc., and policy relocation projects. Generally speaking, such projects are mainly based on cost-effectiveness analysis, and if necessary, comparative analysis can be conducted on the basis of presence or absence.

(1) The role of investment estimation

(2) Requirements for investment estimation

(1) Basis and explanation for preparation of investment estimate (5) Investment estimation of merger and acquisition projects (6) Estimation of interest during construction period (7) Liquidity estimation (8) Utilize the value of original fixed assets (9) Total investment estimate (10) Investment estimation analysis (11) Propose the value-added tax input tax that can be deducted according to regulations in the investment

(2) Construction investment estimation

(3) Investment estimation for individual projects

(4) Investment estimates for renovation, expansion and technological transformation projects

First, investigate the project’s financing environment, financing forms, financing structure, financing costs, and financing risks, and formulate one or more feasible financing plans; Second, after comparison, selection and optimization, solutions with reliable funding sources, reasonable funding structures, low financing costs and small financing risks are recommended. Financing includes equity financing and debt financing.

(1) Source of funds

(2) Financing of Sino-foreign joint venture projects (3) Fund use plan (4) Financing cost analysis (5) Financing risk analysis (6) Financing channel analysis

Public construction projects refer to administrative office buildings, cultural and entertainment venues, sports venues, medical and health facilities, buildings for education, scientific research and design institutions, cultural relics and revolutionary memorial buildings, urban communication facilities, foreign embassies and consulates, etc. The economic analysis focuses on the best cost effects and financial sustainability analysis. On the premise of fully meeting the service functions, the operating costs of the project are calculated and sustainable operation plans are proposed.

Urban infrastructure projects include new construction and renovation projects such as water supply, drainage, roads, bridges, tunnels, flood control, gas, heat, environmental sanitation, gardens and landscapes. This type of project is basically similar to a public construction project, and its financial analysis and economic analysis methods can learn from each other.

Including commercial residences, commercial offices, shopping malls (collectively referred to as commercial housing), etc., as well as affordable housing, limited-edition housing, low-rent housing (collectively referred to as affordable housing), etc., as well as some infrastructure projects. Commercial housing projects are completely market-led. Like general industrial projects, their construction purposes are to meet market demand and make profits. The focus of project research is to obtain better land plots and increase the floor area ratio. Project marketing methods are an important part of project pricing and profitability. The affordable housing project is not entirely market-led. Its pricing and land supply are led by the government. The focus of project research is to obtain better land plots, increase the floor area ratio, and have better design solutions to meet the needs of the government and customers. The project is not aimed at pursuing profit.

This is a way of financing a business. At present, stock issuance in my country is in the form of transfer of assets by existing legal persons. Project legal persons are not yet allowed to issue stocks directly through listing, and can only raise legal person shares through private placement. The common practice at present for enterprise shareholding reform and public issuance of tradable stocks is planning, packaging and other work procedures. This type of project is accompanied by the use of funds raised from listing. According to regulations, a feasibility study report of the investment project must be submitted for approval. The preparation of the feasibility study report is the same as that of general investment projects.

Corporate mergers are the most important direct investment method in the world, including mergers and acquisitions. There are two types of mergers: absorption and merger and merger and establishment. There are generally two types of acquisition objects: equity and assets.

The BOT project is an important way of project financing, including BOT (build-operate-transfer), BT (build-transfer), TOT (transfer-operate-transfer), BOO (build-operate-own), ROO (renovation-transfer) There are more than 20 categories such as operating and owning), PPP, etc. Don't. Its core is to use the future cash flow of the project as collateral on the premise that its own funds are in place to exchange the funds required for the project from the bank for investment and construction of the project.

Mainly invests in innovative products or innovative enterprises, especially high-tech enterprises, engaged in the introduction or growth stage of business incubation of products or industries. After the market stabilizes and the enterprise enters the growth or maturity stage, the investment will be transferred (usually the enterprise is sold) ), an investment method to withdraw from the enterprise to recover the investment. Generally, the capital invested is not high. Venture capital is generally divided into four stages: seed stage, introduction stage, growth stage and maturity stage. The characteristics of venture capital are: 1) It is an early-stage investment, mainly investing in innovative enterprises in the market introduction stage; 2) Venture capital involves high risks, so the returns are higher than traditional investment methods; 3) The term of venture capital is short; 4) Investment returns mainly come from corporate production and operation profits or equity transfers. Exit methods generally include corporate listing (IPO), sale of all or part of corporate equity, or company bankruptcy and liquidation, etc.; 5) Venture capital is mostly invested in high-tech industries and high-speed growth projects. The feasibility study report of a venture capital project mainly focuses on the following aspects: 1) Focus on the potential value of the enterprise; 2) Focus on the growth of the project; 3) Focus on the ability of the management team; 4) Have unique evaluation indicators.

The benefits of mergers and acquisitions include three aspects: capital operating benefits, economic added value, and market added value.

Since franchise projects require complex legal structure support, risks are locked in through guarantees, resulting in high actual operating costs and high project risks. As an investor, when establishing and using a cash flow model to quantitatively analyze and evaluate the value and risk of a project, the primary issue is to reasonably determine and select a discount rate that reflects the project risk. The capital asset pricing model (CAPM model) is A widely accepted and used method of determining the project discount rate in project finance.

Focus on risk analysis and uncertainty analysis of venture capital projects.

1) For projects with no operating income, profitability analysis is not required. Its financial analysis focuses on examining financial sustainability. Such projects often require long-term government subsidies to stay afloat. Costs should be estimated like general projects, including investment and operation and maintenance costs. On this basis, the amount of government subsidies required for each year of the project operation period should be calculated, and possible ways of realizing it should be analyzed. 2) For projects with operating income, financial analysis should treat them differently according to the different extents of income offset expenses. Usually the order of operating income compensation expenses is: payment of operation and maintenance costs, payment of turnover tax, repayment of borrowing interest, provision of depreciation and repayment of borrowing principal. Specifically, it is divided into the following situations: First, for projects that have operating income but are not enough to compensate for the operation and maintenance costs, the income and costs should be estimated, and the difference between the two should be used to estimate the amount of government subsidies required for each year of the operation period, conduct a financial viability analysis, and analyze the government's long-term The feasibility of providing financial subsidies. For projects with debt funds, financial viability analysis should also be conducted in conjunction with loan repayment requirements. Second, the income of some projects is not enough to compensate for all operation and maintenance costs in the short term. However, as time goes by, through the gradual increase in price (charge) levels, it can not only compensate for the operation and maintenance costs, but also pay turnover tax, repay loan interest, and accrue depreciation. , repay the loan principal and generate surplus. Therefore, for such projects that only require government subsidies in the short term to maintain operations, it is only necessary to conduct debt solvency analysis (if there is borrowing) and financial viability analysis to calculate the amount of financial subsidies required in the early years of operation. Analyze the feasibility of the government providing financial subsidies within a limited time. Third, the operating income still has a surplus after compensating the project operation and maintenance costs, paying turnover taxes, repaying loan interest, accruing depreciation, and repaying the loan principal, indicating that the project is financially profitable and viable, and its financial analysis content can be compared with The general projects are basically the same.

For non-operating projects whose benefits are difficult to monetize, the effect-cost ratio or cost-effectiveness ratio can be used to compare and select plans. 1) Comparison and selection requirements (omitted) 2) Commonly used comparison indicators in practical work ① Unit function construction investment refers to the construction investment required to provide the use function of a unit or provide unit services, such as a hospital Investment per hospital bed; investment per student in school, etc. Unit function construction investment = construction investment/design service capacity or facility scale ②Unit function operating expenses refer to the operating expenses required to provide a unit’s use functions or provide unit services. Unit Function Operating Expenses One Year Operating Expenses/Design Service Capacity or Facility Size The above indicators are intuitive, simple, and easy to calculate, but they also have obvious flaws. First, they only calculate investment and cost separately, without making a comprehensive comparison. Second, the cost of the entire calculation period is not considered and the calculation is not based on the time value of money principle.