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Need For Capital Investment - Capital Budgeting – A Conceptual Framework
Financial Management - Capital Budgeting – A Conceptual Framework
Need For Capital Investment - Capital Budgeting – A Conceptual Framework
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The factors that give rise to the need for capital investments are:
Need For Capital Investment
The factors that give rise to the need for capital investments are:
1. Expansion
2. Diversification
3. Obsolescence
4. Wear and tear of old equipment
5. Productivity improvement
6. Learning – curve effect
7. Product improvement
8. Replacement and modernization
The firm’s value will increase in investments that are profitable. They add to the shareholders’ wealth. The investment will add to the shareholders’ wealth if it yields benefits, in excess of the minimum benefits as per the opportunity cost of capital.
It is clear from the above discussion what capital investment proposals involve
a. Longer gestation period
b. Substantial capital outlay
c. Technological considerations
d. Irreversible decisions
e. Environmental issues
The factors that give rise to the need for capital investments are:
1. Expansion
2. Diversification
3. Obsolescence
4. Wear and tear of old equipment
5. Productivity improvement
6. Learning – curve effect
7. Product improvement
8. Replacement and modernization
The firm’s value will increase in investments that are profitable. They add to the shareholders’ wealth. The investment will add to the shareholders’ wealth if it yields benefits, in excess of the minimum benefits as per the opportunity cost of capital.
It is clear from the above discussion what capital investment proposals involve
a. Longer gestation period
b. Substantial capital outlay
c. Technological considerations
d. Irreversible decisions
e. Environmental issues
Tags : Financial Management - Capital Budgeting – A Conceptual Framework
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