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Essay / Research Paper Abstract
This 7 page paper discusses the following statement; “Capital investment decisions are those decisions that involve current outlays in return for a stream of benefits in future years”. This is discusses with references to investment assessment tools that discount future income stream including net present value and internal rate of return. The bibliography cites 11 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TEfutureinc.rtf
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Unformatted sample text from the term paper:
investments are major investments that are made out of capital, not out of the ongoing operational costs. When there are choices regarding the what investment should be made an individual
or company will want to ensure that the investment is both viable and profitable and may also want to ensure that factors such as opportunity costs are minimised (Nellis and
Parker, 2000). An investment may be seen as purchasing goods or financial instruments, but when the purpose of the investment is brought down to its most basic element, the investment
is made to create future income streams, as such it may be argued that the investment is the purchasing of the potential future income streams (Howells and Bain, 2004). In
line with any investment decision the desire will be to maximise the return, however, if there are risk issues there will also be the influence of the risk and reward
relationship, where there is a higher potential risk the investment should also have the potential of giving a higher potential reward (Gregoriou, 2006). Some risks may be unacceptable and the
risk profile of the company may indicate that where risks are not equal safer investment decision may be desired (Mon, 2004). The assessment of a capital investment is therefore
complex and involves more than a simple financial calculation concerning the potential profit. There is the need to consider a range of issues, such as risk, opportunity cost and the
potential indirect costs or benefits, such as impact on reputation, sales and performance of goods sold in other markets that ay compete and result in cannibalisation or complimentary sales if
this is an investment in manufacturing or services. However, despite the many different dimensions to any investment it is still the accounting aspects that are perceived as the most important,
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