The main aim of shareholder holders when making or deciding on capital investment is wealth maximization by purchasing non current asset which can yield profits. The managers of organization are supposed to be in a position to evaluate a project before committing their funds in it to know which venture would result to a positive cash flow when there are constraints in resources. So project investment capital is a sensitive issue as it determines the firm viability.
A business should be able to know and identify the sources of funds available to them. These sources can angel investors, loan from friends and families, loans from bank, financial institutions, money from venture capitalist and equity investors.
Public asset investment projects include construction of railways, roads and dams to benefit the society and to improve infrastructure to encourage more investors to invest in a country. Strategic level of management is tasked with the role of evaluating a capital investment project and making decisions on whether to commit the firms fund on the project or not.
A business can also borrow fund from banks, get government grants, equity investors, issue of debentures and bonds, asset investors, other financial institutions and angel investors. When a business debt is increased, the debt to equity ratio of the business also increases making it difficult for a firm to borrow more funds. The advantage of debt financing is that the interest on debt is an allowable expense to a firm.
Successful companies have a department for development and research, the department consist of a committee. The committee is composed of marketing, finance, technology and several other executives whose responsibility is to create new ideas, improve company services and product and to find new markets. Development and research usually cost a company. Successful companies will aim at achieving the best investment portfolio that will add value to organizations.
The ability to learn and make investment decisions allows a manager to make venture decisions and to allocate the limited resources wisely to achieve strategic goal of organization. This decision are related to capital venture decisions such as building new factory, coming up with a strong marketing campaign, investing in another company through joint venture where both firms gave equal share of the company resources, or subsidiary where a company acquires more than fifty percent of the other company shares, and invest in a company as an associate member where the company purchase less than fifty percent of shares and are entitled to associate share of profit with respect to the shares held.
A new market or new product can conceivably change business nature and scope, and so it is the top level management to evaluate and approve it. Another project that is capital in nature is expansion of already existing product and markets.
The cost benefit analysis is very vital for a project it requires long term estimation of cost and benefit. Taking an example of a typical capital venture which involves acquisition of a fixed asset, the asset has it estimate useful life during which it will be used to maximize on sales revenues while reducing cost of operation. After the asset useful life has elapsed, the asset can either have a residue or disposal value and it can be sold to fetch some funds.
The investing organization is greater than investment project in question, the investment will not change the business previous activities, it does not change organization capital structure and finally that lenders of funds will not change their lending rates.
A business should be able to know and identify the sources of funds available to them. These sources can angel investors, loan from friends and families, loans from bank, financial institutions, money from venture capitalist and equity investors.
Public asset investment projects include construction of railways, roads and dams to benefit the society and to improve infrastructure to encourage more investors to invest in a country. Strategic level of management is tasked with the role of evaluating a capital investment project and making decisions on whether to commit the firms fund on the project or not.
A business can also borrow fund from banks, get government grants, equity investors, issue of debentures and bonds, asset investors, other financial institutions and angel investors. When a business debt is increased, the debt to equity ratio of the business also increases making it difficult for a firm to borrow more funds. The advantage of debt financing is that the interest on debt is an allowable expense to a firm.
Successful companies have a department for development and research, the department consist of a committee. The committee is composed of marketing, finance, technology and several other executives whose responsibility is to create new ideas, improve company services and product and to find new markets. Development and research usually cost a company. Successful companies will aim at achieving the best investment portfolio that will add value to organizations.
The ability to learn and make investment decisions allows a manager to make venture decisions and to allocate the limited resources wisely to achieve strategic goal of organization. This decision are related to capital venture decisions such as building new factory, coming up with a strong marketing campaign, investing in another company through joint venture where both firms gave equal share of the company resources, or subsidiary where a company acquires more than fifty percent of the other company shares, and invest in a company as an associate member where the company purchase less than fifty percent of shares and are entitled to associate share of profit with respect to the shares held.
A new market or new product can conceivably change business nature and scope, and so it is the top level management to evaluate and approve it. Another project that is capital in nature is expansion of already existing product and markets.
The cost benefit analysis is very vital for a project it requires long term estimation of cost and benefit. Taking an example of a typical capital venture which involves acquisition of a fixed asset, the asset has it estimate useful life during which it will be used to maximize on sales revenues while reducing cost of operation. After the asset useful life has elapsed, the asset can either have a residue or disposal value and it can be sold to fetch some funds.
The investing organization is greater than investment project in question, the investment will not change the business previous activities, it does not change organization capital structure and finally that lenders of funds will not change their lending rates.
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