Long Term Investment Decisions

Topics: Investment, Rate of return, Net present value Pages: 4 (1315 words) Published: June 19, 2013

Long-Term Investment Decisions
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Introduction
Long term capital decisions involve choosing how to finance long term projects. For a movie rental company, such decisions would include opening new shops in new markets or buying new machinery that would improve the firm’s technology. Before making such decisions, a firm has to do an analysis of the returns that the new project would bring against the cost outlay of the project. There are several ways of doing such an analysis. They include the payback period, net present value, internal rate of return among others. The main aim of conducting this analysis is to determine whether the expected returns meet a certain predetermined benchmark, usually higher than the risk free return. Rationale for government intervention

The United States government intervenes in business processes in a number of ways; it has formulated regulation that governs the film distribution industry to ensure a level playing field, ensuring employee protection, protection of the environment etcetera. For instance, there are laws that govern advertising. These laws are set to ensure that advertisers are truthful and honest in their adverts. To protect the rights of employees, the government regulates issues such as the minimum wage payable to an employee, the maximum working hours and a good working environment.

In addition, the government has put measures that regulate waste management and protection of the environment. Through the environmental protection agency, the government ensures businesses comply with environment protection regulation in order to protect the environment (Graham et al, 2010). Why Government Regulation is needed

Governments in all countries in the world regulate business for both economic and social reasons. In the recent past governments have continually regulated businesses for economic reasons mostly to prevent falling productivity especially in developed economies. Social...

References: Top of Form
Graham, J. R., Smart, S. B., & Megginson, W. L. (2010). Corporate finance: [linking theory to what companies do]. Mason, OH: South-Western Cengage Learning.
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Top of Form
Khan, M. Y., & Jain, P. K. (2004). Financial management; Text, problems and cases. New Delhi: Tata McGraw-Hill.
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Thukaram, R. M. V. (2003). Management Accounting. New Delhi: New Age.
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