Capital investments

Capital investments are the most important decisions made by a firm’s management, because they usually involve large cash outflows and once made are not easily reversed. These are usually long-term

Capital investments are the most important decisions made by a firm’s management, because they usually involve large cash outflows and once made are not easily reversed. These are usually long-term projects that will define the firm’s line of business and significantly contribute to the total revenue figure for years to come. Capital investment decisions are often incremental, involving cash flows over multiple periods. Therefore, procedures must be in place to monitor the progress of projects. One such procedure is the Milestone approach.

  1. Based on your knowledge concerning capital budgeting, discuss several factors that would increase the risk associated with a company’s capital investment decision. In your opinion explain which factors increase the risk more than others.
  2. Based on you knowledge concerning capital budgeting, discuss several factors that would decrease the risk associated with a company’s capital investment decision. In your opinion explain which factors decrease the risk more than others.
  3. Capital investment decisions are often incremental, involving cash flows over multiple periods. Therefore, procedures must be in place to monitor the progress of projects. One such procedure is the Milestone approach. Conduct a preliminary search to explain how this approach works and why the approach can sometimes be ineffective.
  4. To what extent have you seen evidence, what economic conditions have prompted American businesses to reevaluate their traditional approach to capital investment decisions?

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Capital investments was first posted on November 4, 2019 at 8:58 pm.
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