Write a 700- to 1,050-word paper that explains the objectives of capital investment decisions.

Write a 700- to 1,050-word paper that explains the objectives of capital investment decisions.

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Expert Solution

Capital investment decision is the method of taking decision on long-term investment options involving huge capital expenditure. It is the investment decision on fixed assets or capital expenditure.

Objectives of capital investment decisions

To find out the profitable capital expenditure : Capital investment decisions using various techniques helps the company to find out the profitable investment from various investment proposals.
To know whether the replacement of any existing fixed assets brings profits : Replacement of fixed assets are done to increase the profitability. Capital budgeting decisions helps to identify whether this replacement is profitable or not.
To decide whether a specified project is to be selected or not : Capital investment decisions are on the selection of the project proposals.
To evaluate the merits of each proposal to decide which project is best : Evaluation of various project appraisals throws light on the profitable projects. It is helpful to find out the best project.
To control the capital expenditure : The capital expenditure involves huge amount of money. So it is essential to control such expenditure. Investing in only profitable projects is the only way to control the expenditure. Capital investment decisions helps for it.
To find the right source of fund : Selection of right source of fund for the right project proposal is the another objective of the capital investment decisions. Right source of fund ensures control of cost of financing projects.

These are the main objectives of capital investment decisions.

jeff jeffy answered 1 year ago

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