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What is investment costs?

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What is the investment cost</a>

Investment costs are the total costs that are associated with the implementation of business projects.

Their types and composition vary depending on the particular project.

Types of investments

Investment costs are the sum of all costsThe company aimed at its normal functioning. The amount of investment costs proportionately affects the level of profitability of the project. Accordingly, the lower the costs, the greater the income.
In general terms, in terms of cost types, real (capital-forming) and financial investments are distinguished.
As objects of real investment canAct as fixed assets, real estate, stocks, assets, R & D, investments in personnel (training and further training). It is important to note that investments in improving the professional level of employees and new developments can be attributed to investment only when implementing investment projects.
Capital investments can be directed to new construction, and expansion, reconstruction or re-equipment of enterprises.
Objects of financial investments can be securities (stocks, bonds, etc.), deposits, foreign currency, precious metals, etc.
There are gross and private investmentexpenses. Gross is the amount of real investment for a certain period. These costs are realized at the expense of own funds (depreciation, profit), borrowed (from the issue of shares) or borrowed funds (loans and bonds). Net investments, in contrast to gross investments, are reduced by the amount of depreciation.

The composition of investment costs

The composition of investment costs included the mainAnd net working capital. The main capital includes the costs of creating infrastructure and fixed assets. To clean - the costs of maintaining the stability of production, they are also called operating costs.
It is customary to classify expenses for direct,Indirect, explicit (implicit) and not reimbursable. Direct costs are directly related to the implementation of investment projects. This, in particular, costs for the acquisition and commissioning of equipment, transportation, installation of products or raw materials.
Indirect costs are associated with the creation of externalFavorable conditions for the organization of production. This, for example, legal, accounting support for the project, payment for contractors. Accounting for these costs reduces the profitability of the project.
Implicit or hidden costs arise when there is an excess of production assets that are not involved in generating income.
If the expenses were not taken into account in the investment project, they are not reimbursed. For example, this is the cost of developing a business plan or conducting marketing research.
The composition of costs for capital-forming and financial investments varies. In the first case, the following types of expenditure are allocated:
- R & D-
- preparation of project documentation-
- obtaining permits, licenses-
- acquisition and construction of real estate-
- purchase of equipment, its delivery, installation and commissioning-
- Compulsory tax payments and customs duties-
- other expenses - for example, connection to power networks.
When making financial investments in the composition ofCosts include the cost of buying securities, transaction costs (spreads and commissions), encouragement to the manager of a personal account, tax payments. Also, the investor may incur costs associated with the acquisition of market intelligence, payment for consulting services.

What is investment costs? Was last modified: June 20th, 2017 By Wapfaabn
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