TABLE OF CONTENTS
TITLE PAGE PAGE
CERTIFICATION I
DEDICATION II
ACKNOWLEDGEMENT III
TABLE OF CONTENTS V
CHAPTER ONE
1.0 INTRODUCTION 1
1.1 STATEMENT OF THE PROBLEM 2
1.2 OBJECTIVE OF THE STUDY 3
1.3 SIGNIFICANT OF THE STUDY 4
1.4 SCOPE OF THE STUDY 4
1.5 PLAN OF THE STUDY 5
1.6 RESEARCH METHODOLOGY 5
1.7 DEFINITION OF THE TERMINOLOGY 6
CHAPTER TWO
2.0 LITERATURE REVIEW 16
2.1 INTRODUCTION 16
2.2 CONTROLLING DECISION 20
2.2.1 ORGANIZATION DECISION 20
2.2.2 STAFF DECISION 21
2.2.3 MOTIVATION DECISION 22
2.2.4 THE EVALUATION DECISION 22
2.3 CAPITAL EXPENDITURE DECISION 23
2.3.1 SELECTION OF RELEVANT DATA FOR DECISION MAKING 24
2.3.2 USING COSTING DECISION MAKING 25
2.3.3 COMPREHENSIVE INCOME APPROACH 25
2.3.4 DIFFERENTIAL ANALYSIS APPROACH 25
2.3.5 FINANCIAL ACCOUNTING 26
2.4 IDENTIFY RELEVANT DATA FOR SPECIAL DECISION 26
2.4.1 PURCHASING A NEW EQUIPMENT 27
REFERENCES 37
CHAPTER THREE
RESEARCH METHODOLOGY 38
3.0 INTRODUCTION 38
3.1 SAMPLE SIZE 39
3.2 SAMPLE TYPE 39
3.3 HISTORICAL BACKGROUND OF THE STUDY 40
3.4 METHOD OF GETTING DATA (PRIMARY AND SECONDARY) 42
CHAPTER FOUR
DATA PRESENTATION ANALYSIS AND INTERPRETATION 45
4.1 INTRODUCTION 45
4.2 CAPITAL BUDGETING DECISION 46
4.3 SCREENING TESTS 48
4.4 THE NET PRESENT VALUE METHOD 48
4.5 CALCULATION OF IRR BY LINEAR NTERPRETATION 54
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
5.0 SUMMARY OF FINDING 56
5.1 CONCLUSION 57
5.2 RECOMMENDATION 58
5.3 LIMITATION OF THE STUDY 59
BIBLIOGRAPY 61
CHAPTER ONE
1.0 INTRODUCTION
Capital investment decision is a business entity is a function of the top management in an organization the taking of decision to in primary is predetermination of organization goal and constant evaluation of the feasible strategies used for attainment of goals and objective. This decision involves the commitments of capital into investment or projects that have long term span, or allocation of capital to long term asset, that would yield benefit in the future. Due to the fact that future benefits are uncertain, investment decision involve risk and uncertainty. Therefore investment proposals should be evaluated in terms of both return or profit and risk, these two factors affect the firm’s market value.
The process of planning and managing a firm’s long term investment is referred to as capital budgeting, which would be treated later in this book. One of the function of the financial manager is to evaluation the expected cash inflows, that is cash expected to receive from investment when the cash is expected (the time )and compare it with expected cash outflow, that is expenditure on the investment. Also the financial manager is expected to evaluate the size, timing and risk of future cash flows before the final selection of investment/ projects.
