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

Capital Investment Process - Essay ExampleTherefore, it was everlastingly implied that despite techniques used to make the future more clear, capital investment finding 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 essay begins with building a metaphysical base to get the reader familiar with some basic concepts of capital investment appraisal theory. The second part of the essay is devoted to a step-by-step analysis of the investment puke 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 different 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 specific characteristic s of every project oblige management to choose carefully and with correspondence to the intimately vital needs of the business.The most normal example is the choice between long-term investment project with high return value and short-term project but with lesser return. Although the first breeding plan will lead to better profits in the end, sometimes a company chooses the second one. That means the time factor is more of the essence(p) for owners than greater profits in the illustrated case.Generally, capital investment decisions are always connected to the following list of specific featuresa significant outlay of bullionlong-term involvement with greater risks and uncertainty because forecasts of the future are less reliableirreversibility of some projects due to their specialised nature, for example, plant which having been bought with a specific project in mind may have little or no scrap value a significant time lag between inscription of resources and the receipt of be nefitsmanagements ability is often stretched with some projects demanding an awareness of all relevant diverse factorslimited resources require priorities on capital expenditureproject result time requires adequate continuous control information as costs can be exceeded by a significant amount. (McGrath, 1998)These characteristics make 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 elect strategy.There several factors, which should be taken into consideration during evaluation of investment opportunities initial cost of the project phasing of the expenditure estimated life of the investment amount and measure of the