The main aim of shareholder holders when making or deciding on capital investment is wealth maximization by purchasing non current asset which can yield profits. The managers of organization are supposed to be in a position to evaluate a project before committing their funds in it to know which venture would result to a positive cash flow when there are constraints in resources. So project investment capital is a sensitive issue as it determines the firm viability.
There are several sources of funds available to a firm and they include banks, equity investors through issue of shares, financial institutions, angel investors, gentlemen in dark glasses, shy locks and venture capital. Capital investment is not only meant for resources or long term asset but they can also be used for purposes of working capital.
Public asset investment projects include construction of railways, roads and dams to benefit the society and to improve infrastructure to encourage more investors to invest in a country. Strategic level of management is tasked with the role of evaluating a capital investment project and making decisions on whether to commit the firms fund on the project or not.
A business can also borrow fund from banks, get government grants, equity investors, issue of debentures and bonds, asset investors, other financial institutions and angel investors. When a business debt is increased, the debt to equity ratio of the business also increases making it difficult for a firm to borrow more funds. The advantage of debt financing is that the interest on debt is an allowable expense to a firm.
Shareholders will go for ventures that maximize their wealth. The shareholders will take up ventures which will result to growth of the company in the future. But the overall goal is to take up projects that will add value to the firm.
There are many asset investment projects and include investment in new markets or products. New asset venture is necessary for the expansion and growth of the company. A company growth is also very important to the economy as it results to more jobs being created and also more revenue to the government.
Capital decisions involve a process so that one can use to reach to an accurate conclusion, the process start with project identification, then defining project, screen, implementation, monitoring and carrying out post audit.
The expansion of market and existing product results to growth of the firm. This venture requires thorough financial analysis. Another capital venture is replacement project, this decision are usually common in manufacturing companies where they have to replace an old manufacturing plant.
To evaluate the viability of the new machine a firm uses the projected cash flow from the new machine, they are discounted to get their net present value the resultant present value is compared against the present value of old machinery, if the present value of new machinery is bigger than the present value of old asset then the firm can go ahead to commit their funds.
There are several sources of funds available to a firm and they include banks, equity investors through issue of shares, financial institutions, angel investors, gentlemen in dark glasses, shy locks and venture capital. Capital investment is not only meant for resources or long term asset but they can also be used for purposes of working capital.
Public asset investment projects include construction of railways, roads and dams to benefit the society and to improve infrastructure to encourage more investors to invest in a country. Strategic level of management is tasked with the role of evaluating a capital investment project and making decisions on whether to commit the firms fund on the project or not.
A business can also borrow fund from banks, get government grants, equity investors, issue of debentures and bonds, asset investors, other financial institutions and angel investors. When a business debt is increased, the debt to equity ratio of the business also increases making it difficult for a firm to borrow more funds. The advantage of debt financing is that the interest on debt is an allowable expense to a firm.
Shareholders will go for ventures that maximize their wealth. The shareholders will take up ventures which will result to growth of the company in the future. But the overall goal is to take up projects that will add value to the firm.
There are many asset investment projects and include investment in new markets or products. New asset venture is necessary for the expansion and growth of the company. A company growth is also very important to the economy as it results to more jobs being created and also more revenue to the government.
Capital decisions involve a process so that one can use to reach to an accurate conclusion, the process start with project identification, then defining project, screen, implementation, monitoring and carrying out post audit.
The expansion of market and existing product results to growth of the firm. This venture requires thorough financial analysis. Another capital venture is replacement project, this decision are usually common in manufacturing companies where they have to replace an old manufacturing plant.
To evaluate the viability of the new machine a firm uses the projected cash flow from the new machine, they are discounted to get their net present value the resultant present value is compared against the present value of old machinery, if the present value of new machinery is bigger than the present value of old asset then the firm can go ahead to commit their funds.
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