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How do you turn investments into profits? Managers have to look at the acceptance criteria. Meaning...

How do you turn investments into profits? Managers have to look at the acceptance criteria. Meaning what are investors willing to accept as a return and in how many years or months. What other factors must managers look at when evaluating the future value and present value?

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Expert Solution

Managers will always have to look at acceptance criteria in order to turn the investment into the profits and duration of investment is very much important

Other factors which the manager would be looking at-

A. He would be looking at the risk management of various projects in order to make profits

B. He would also be looking at growth prospects of the company in order to discount the cash flows arising out of various business

C. He should be properly determining the cost of capital associated with various projects of the company which will be specific in nature.

D. He should be also trying to identify the present value of those cash flows and then he need to compare them with the outflows in order to arrive at projected net cash flows and he can regularly compare those cash flows with the actual cash flows in order to better control and make profits.

E. He should be aware of various kinds of macrotrends and he should be continuously at adjusting for them because these are systematic risk cannot be predicted completely in advance.

jeff jeffy answered 2 years ago
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