Managers often face major decisions that involve cash flows over several
years. Decisions relating to the purchase of machinery, equipment, vehicles, land, and buildings are examples.
Other decisions may relate to radical changes to a production process or addition of a new line of products or
service. The competitive position of an enterprise depends upon these capital investments.
The selection of the right project for future investment is an important decision for the long-term continuance of a
company (Burke, 2006: 56). Capital investments often involve large sums of money and the selection of the wrong
project may lead to the liquidation of the company should the project fail. Furthermore it is difficult and/or expensive
to cancel the investment in a project once the investment is made.
Decisions that require the evaluation of cash inflows and outflows over several years to determine the acceptability
of a project are known as capital expenditure (or capital budgeting or capital investment) decisions.
- Lectures 17
- Quizzes 2
- Duration 50 hours
- Skill level All levels
- Language English
- Students 30
- Assessments Yes