Question

Investment Decisions

What types of decisions would need to be made before the investment is made? Indicate the main kinds of information/data needed to evaluate this capital investment project.

Answer 1

Many strategic investment ventures have ill-structured challenges, calling for an strategy that may never have been used before, and uncertainty, innovation, irreversibility and confusion characterize these investment decision ventures. It is important that we recognize and put in place the strategies to deal with such issues and problems, because if you make one wrong investment decision, it can have a negative impact on the value of a business , making creditors and investors unwilling or unwilling to fund the business at any time in the future.

Project ranking capital investment decision plays a crucial role in capital investment decisions. Depending on the type of project that a firm has at a given point in time, the companies prioritize the different projects. Project ranking depends on how much a particular project would return and which project has the ability to deliver a maximum value to the business

The process of making a capital investment decision involves these steps:

Identification of a project

Definition of a project and screening

Analysing and accepting

Implementation

Monitoring

Post audit

Capital investment decisions are geared towards expanding levels of operations. It is achieved by acquiring fixed assets by buying plant facilities and property, which in turn ensures a good investment and capital investment balance: post-maturity period, when a company's growth slows down, companies; worn-out or outdated assets need to be replaced, such as machinery, vehicles , equipment, etc. Thus, an organization can revert fully to its production and yield the desired benefits.