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BA (HONS) BUSINESS MANAGEMENT
FINANCIAL MANAGEMENT
ASSIGNENT CODE: APC 308
NAME : LEENA BALGOBIN
INTAKE : JANUARY 2007
DATE OF
SUBMISSION: 05 OCTOBER 2009
PART A
Critically evaluate the role and importance of investment appraisal models in achieving the financial management objectives of large companies.
Investment involves outflows of cash causing inflows of cash. It is in nature of things that cash flows (out and in) do not all occur at the same time, that is, there is some time lag, perhaps a considerable one, between them. The typical project opportunity involves a relatively large outflow of cash initially, giving rise to a subsequent stream of cash inflows.
Selecting which investment opportunities to pursue and which to avoid is a vital matter to businesses because individual projects frequently involve relatively large and irreversible commitments of finance and they involve this commitment for long, often very long period of time.
The investment decision is the most important one. Costly and far reaching mistakes and probably will be made unless businesses take great care in making their investment decisions. Bad decisions usually cause major financial loss, and any particular business can make only a limited umber of misjudgements before collapse occurs.
Investment Appraisal Models
It is important that financial resources should be deployed to best advantage and so good investment decisions are vital to successful financial management.
There are several techniques available whereby investment proposals can be evaluated. Since, however, all require projections of future costs and returns they cannot be guaranteed to lead to successful decisions. It can, perhaps be claimed that they increase the probability of success.
A highly sophisticated, apparently accurate, method of project appraisal with sound theoretical basis will not necessarily give sufficient extra success to warrant the cost involved in using it.
FINANCIAL MANAGEMENT
ASSIGNENT CODE: APC 308
NAME : LEENA BALGOBIN
INTAKE : JANUARY 2007
DATE OF
SUBMISSION: 05 OCTOBER 2009
PART A
Critically evaluate the role and importance of investment appraisal models in achieving the financial management objectives of large companies.
Investment involves outflows of cash causing inflows of cash. It is in nature of things that cash flows (out and in) do not all occur at the same time, that is, there is some time lag, perhaps a considerable one, between them. The typical project opportunity involves a relatively large outflow of cash initially, giving rise to a subsequent stream of cash inflows.
Selecting which investment opportunities to pursue and which to avoid is a vital matter to businesses because individual projects frequently involve relatively large and irreversible commitments of finance and they involve this commitment for long, often very long period of time.
The investment decision is the most important one. Costly and far reaching mistakes and probably will be made unless businesses take great care in making their investment decisions. Bad decisions usually cause major financial loss, and any particular business can make only a limited umber of misjudgements before collapse occurs.
Investment Appraisal Models
It is important that financial resources should be deployed to best advantage and so good investment decisions are vital to successful financial management.
There are several techniques available whereby investment proposals can be evaluated. Since, however, all require projections of future costs and returns they cannot be guaranteed to lead to successful decisions. It can, perhaps be claimed that they increase the probability of success.
A highly sophisticated, apparently accurate, method of project appraisal with sound theoretical basis will not necessarily give sufficient extra success to warrant the cost involved in using it.