Investment decisions
Investment decisions are at the heart of the management of all businesses,
except the very smallest. Errors in these decisions can, and do, prove fatal
for many businesses.
Chapter 4 starts with an explanation of the nature and importance of
investment decisions. It continues with some fairly detailed explanations of
the major investment appraisal methods used in practice. It concludes with
some discussion of the extent of the use of these methods in practice.
Chapter 5 is concerned with some of the practical aspects of making
investment decisions. These include taxation, inflation, the problem of
dealing with shortages of investment finance and real options. Chapter 5 also
looks at how investment decisions fit in with the business’s overall strategy.
Chapters 6 and 7 are concerned with various approaches to trying to make
investment decisions where, as is always the case in reality, the outcome
of an investment is not known with certainty. Chapter 7 is particularly
concerned with attempting to assess the likely effect of the risk of a
particular investment on the business’s owners.
PART 2