Capital Investment Process Essay Example | Topics and Well Written Essays - 3250 words

Capital Investment Process - Essay ExampleTherefore, it was always implied that despite techniques used to pull back the future more clear, capital investment decision requires a manager to use intuition.This study of a Boston Mayflower - a residential social landlord with about 5,000 houses - indicates that more accent must be put on qualitative appraisal techniques. The render begins with building a theoretical base to retrieve the reader familiar with some basic concepts of capital investment appraisal theory. The second part of the essay is addicted to a step-by-step analysis of the investment project of Boston Mayflower.This part of the essay is devoted to the description of methods used in the analysis of capital investment. Developed theoretical frameworks include several divers(prenominal) techniques of analysis varying mainly in measures of investments. In other words, it is clear that the ultimate goal of every investment is maximisation of owners wealth however specif ic characteristics of every project oblige management to bring carefully and with correspondence to the most vital needs of the personal credit line.The most typical example is the choice betwixt long-term investment project with high return value and short-term project but with lesser return. Although the first development excogitation will lead to better profits in the end, sometimes a company chooses the second one. That means the time factor is more important for owners than greater profits in the illustrated case.Generally, capital investment decisions are always connected to the following list of specific featuresa world-shattering outlay of cashlong-term involvement with greater risks and uncertainty because forecasts of the future are less goodirreversibility of some projects due to their specialised nature, for example, plant which having been bought with a specific project in mind whitethorn have little or no scrap value a significant time cast aside between commitm ent of resources and the receipt of benefitsmanagements ability is often stretched with some projects demanding an awareness of all relevant respective(a) factorslimited resources require priorities on capital expenditureproject completion time requires adequate round-the-clock control information as costs can be exceeded by a significant amount. (McGrath, 1998)These characteristics get down the managerial decision even more important, as it must be connected with the strategy of a company. Simply, a manager should choose not the most profit-making project, but the most suitable one for the business strategy of his/her company. This statement leads to a careful choice of the evaluation technique used to determine, which investment plan complements best the chosen strategy.There several factors, which should be taken into consideration during evaluation of investment opportunities sign cost of the project phasing of the expenditure estimated life of the investment amount and timi ng of the