There are 5 techniques that have been employed in this particular scenario: simple payback method; accounting rate of return (ARR); net present value (NPV); and internal rate of return (IRR) (Mott, 1997). Capital Investment Appraisal Capital investment appraisal is the evaluation of the attractiveness and viability of an investment proposal, using techniques like payback period; net present value (NPV); average rate of return (ARR); or internal rate of return (IRR) (Go?tze, Northcott & Schuster, 2008). Investment appraisal is an essential part of capital budgeting and is relevant in cases where the returns cannot be easily quantified (e.g. training, marketing, and personnel). All businesses need fixed assets (capital equipment) like vehicles, premises, and machinery. The acquisition of those assets is called capital investment. Just like other business activities, capital investment comes with an element of risk and uncertainty, because costs are incurred today so as to generate some benefits in the future (Harrison, 2003). Capital investment appraisal techniques are aimed at enhancing and supporting decision making on such investment undertakings. The Appraisal Techniques i) Payback Period Method This technique is based on the time needed for the forecasted net cash flows to equal the amount of capital that has been invested in a potential investment initiative (Mott, 1997). The investment project that repays whatever capital invested in the least possible time is considered to be the most attractive (Gardner, 1998). This technique requires the following estimates: (a) amount of capital needed, and (b) the timing and amount of the net cash flows an investment generates. Advantages a) Simple to compute and easy to understand b) Suitable for risky projects where it is difficult to predict future cash flows beyond the first couple of years (for instance, IT). c) Suitable if short term cash flows are more critical to the survival of an investment than long-term cash flows. d) Suitable when there is a concern regarding gearing or borrowing. Disadvantages a) Does not factor in the time value of money (cash now is often more valuable than cash received later). b) Disregards cash flows when the payback period elapses. ii) Accounting Rate of Return While the payback period method concentrates on cash flows, the ARR concentrates on profit. It measures the forecasted average profit before tax and interest as a percentage of the average capital invested in a business venture. Advantages a) Simple to compute and easy to understand b) Caters for the entire life of an investment c) Compatible with ROCE and the performance ratio Disadvantages a) Does not account for the time value of money b) Does not offer guidance on what is a good rate of return c) Averages can be confusing and misleading d) Disregards the timing of profits e) No uniform definition of terms iii) Net Present Value This is the present value of all the present and future cash flows of an investment, discounted at those cash flows’ opportunity cost. Advantages a) Accounts for effects of inflation b) Adjust future cash flows to a PV (present value) Disadvantages a) Inflation is usually unpredictable b) The longer you go into the future the less reliable the discount
Capital Investment Appraisals (Author’s name) (Institutional Affiliation) Introduction Capital investment appraisal is a technique that is used to evaluate a business or potential investment in order to determine whether it is viable depending on the returns and risks that are likely to be involved (Bullock & Jones, 2006)…
The concept itself is derived from the basic trait of human being as a social animal who is dependent on others for his very basic needs. It is quite true no person on this earth can live alone and no societal institution or any commercial or non commercial establishment can survive without remaining socially connected to each other and so is derived the term “social capital.” Understanding this important trait of human beings, different agents and research institutions have begun to construct this term from different perspectives and understanding which elements of it are the most crucial for the society.
While the US economy is estimated to have a modest growth, in Asia the growth seems to be sluggish. However, China is showing signs of sustainable and steady economic growth at 7-8 percent (Reserve Bank of Australia, 2012a). So analyzing the global economic scenario, it can be said that the growth rate at the end of 2012 is expected to be around 3.5 percent, which might pick up to 4 percent at the beginning of 2013.
Formal education and participation in ongoing training factors related to the workplace setting also help enhance human capital that every employee represents. The increase in the economic value of man gave rise to the concept of human capital. Conceptualized by Mark Blaug forty five years ago, this is embedded in the economic theory of human resources in the form of human capital theory (Blaug, 1976:827).
This unusual situation can take place when the decision is made to support a moral justice or a greater good. This paper will concentrate on capital punishment or the death penalty, a practice that some people consider as morally right while others disagree.
Companies are highly geared when the fixed charges are substantially higher than the competition. Gearing is speculative and expected to provide benefits for shareholders when the firms are performing well. The concept of gearing has always been linked with uncertainties.
This perspective is because social capital is increasingly difficult to measure even to accommodate in public policy.
The purpose of the paper will be to provide an all encompassing definition of the phenomenon of social capital, identify
While there are many countries which still implement the capital punishment, which sometimes referred to as death penalty, there is a growing number of countries which start campaigning for the abolishment of the death penalty from their justice system. The opponents of the