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Annals of the University “Constantin Brâncuşi”of Tg-Jiu, No. 1/2008, Volume 3, ISSN: 1842-4856 By analyzing the results obtained in stages, by applying these three methods, we conclude that the person making the decision goes from a categorical decision of rejecting the investment project, to decision of accepting it, reflected in the criteria of adjusted net present value and stock holders’ cash-flows method. We then ask the question when we must apply one or the other of these three methods. If the risk of the project remains constant for the entire life span of the project, obviously the capital cost rate will remain constant during this period of time. If the debt rate (and proportion) remains constant, then the rate of the weighted average cost of capital will remain constant, which makes it easier to apply the method of the weighted average cost of capital method and the stockholders’ cash-flows method. As a matter of fact, the firm must propose, fro the investment projects, a debt target rate, which must be identical with the existent financing structure of the enterprise, so as not to modify the risks associated with debt. We thereby recommend the use of the weighted average cost of capital method and the stockholders’ cash-flows methods. If the amount of the debt is known for the entire life span of the project, then the method of the adjusted net present value is easier to apply. But this method is frequently used in the following cases: - when a valorized interest rate exists; - when the firm gets the right to use the machines through leasing; - if the sale of the firm is done by LBO method (leveraged buyout, buying the firm from a small group of investors by a loan to be reimbursed based on the cash-flows generated by the firm’s activity and/or by selling some of the actives), a case in which the degree of debt is very high, but the reimbursement plan is known. Bibliography 1. Berceanu, D. The Firm’s Financial Decisions, 2nd edition, Universitaria 2. Ross, S.A. Westerfield, R.W. Jaffe, J.F. 3. Sichigea, N. Giurcă, L. Publishing House, Craiova, 2006 Corporate finance, Dunod Publishing House, Paris, 2005 Corporate finance, Universitaria Publishing House, Craiova, 2007 4. Stancu, I. Finances, 3rd Edition, Economical Publishing House, Bucharest, 2002 34
Annals of the University “Constantin Brâncuşi”of Tg-Jiu, No. 1/2008, Volume 3, ISSN: 1842-4856 CHALLENGES OF THE BANKING SYSTEMS FROM THE CENTRAL AND EAST EUROPEAN COUNTRIES, IN THE CONTEXT OF EUROPEAN UNION INTEGRATION AND THE ENTRANCE IN THE INTERNATIONAL FINANCE CIRCUIT Autor: Tanascovici Marinela, preparator Facultatea de Ştiinţe Economice, Universitatea din Piteşti ABSTRACT From the moment that the Central and East European countries will reach the convergence criteria, thus they will be prepared to be integrated in the European Union, implicitly the European banking market will extend its borders, also including their banking societies. The East and Central European banks must gradually put into practice the organizational changes, in accordance with the apparition and development of the operating possibilities on the European banking market, for every market it will be necessary to modify, correspondently, the work procedures, the documents that will have to contain specific elements, particular for every banking society and for every type of activity as well as elements in common, in communitarian vision, obtains as a consequence to the legislative, normative, procedural and institutional harmonization. Another request for the banks in East and Central European countries, in the context of participation to the sole European market, is the diversification and development of the offered products and services. The participation of the banks from the ex-communist countries at the European competition for funds implies, except the ones previously mentioned, a harmonization of the banking regulations and the interne legislation, especially the fiscal one. Once the banks from East and Central European countries will succeed to penetrate on the European market and to benefit from their own membership in the Union, they will operate in a competitive space in which an important aspect is the one of the competition for funds and placements. Obviously, the East European countries do not share the same recent history like the Occidental ones do, and, therefore, did not follow the same development or the same capacity of adapting to the environment like the banks from the developed countries, and, even so, on their turn, they confront themselves with a lot of „challenges” that „historically” far surpasses those of West European banks by the simple fact that they have to keep up with the transition to the market economy, as well as with the conjuncture development of the beginning of XXIst century. From the moment that the Central and East European countries will reach the convergence criteria, thus they will be prepared to be integrated in the European Union, implicitly the European banking market will extend its borders, also including their banking societies. From now on the banks will be confronted with supplementary risks, which are actually none other than those stipulated in the banking risk theory, and already taken into consideration by the bank’s risk committees. The problem is that those risks increase their complexity in correspondence with the new development frame of the banking operations. From the bank’s management point of view, the problem is reduced to the following situation: the respective bank, having the permanent interest to look for new funds placement possibilities, following the profit and risk objectives previously set, it has the possibility to 35
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The great companies can choose eith
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