Division For a project to require the contribution of the Funds:

FNPV(C) before the EU contribution should be negative and FRR(C) should be lower than the discount rate used for the analysis (except for some projects falling under State aid rules for which this may not be relevant).

If a major project shows high financial profitability (i.e. FRR(C) is substantially higher than the financial discount rate) it will, as a general rule, be considered sufficient for an investor to implement the project without Union contribution. A Union contribution may be justified only if it is demonstrated that the investment is not bankable on its own considering that the risks for an investor to implement the project e.g. highly innovative project may be too high to carry out the investment without a public grant.

The financial profitability of national capital is assessed by estimating the financial net present value and the financial rate of return on capital (FNPV(K) and FRR(K)). These indicators measure the extent to which the project's net revenues are able to repay the financial resources provided by the national funds (both private and public sources).

Calculation of FNPV(K) and FRR(K) requires that:

• the financial resources — net of EU support — invested in the project are treated as outflows disregarding investment costs;

• capital contributions are considered at the moment they are actually paid out for the project or reimbursed (in the case of loans);

• interest payments are included in the table for the analysis of the return on capital (FNPV(K));

• operating subsidies are not included in the table for the analysis of the return on capital (FNPV(K)).