Investment Analysis

IGWE, Nick Ngozi (2003) Investment Analysis. In: Project Management Project Abandonment proposal and Feasibility Studies. Rhyce Kerex Publishers, pp. 229-240. ISBN 978-8076-79-3

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Investment can be defined as a firm commitment of scarce resources made in the hope of realizing benefits or returns that are expected to occur over a reasonably long period of time in the future. From the above, it can be seen that neither the resources nor the benefits need be in the form of explicit cash flows. For instance, a decision to have a Chemical Engineer spend a month studying the capabilities of various types of computer aided design devices would be an investment in the light of this definition. Here the engineer's time is a scarce resource, because he would have spent the month in other activities that are valuable to the firm. In the first instance, the expected benefits will be increased knowledge by the management of a relatively new technology. Thus there is no explicit cash outlay or cash inflow but there is an investment. Investment can also be seen as a firm's decision to invest its current funds most efficiently in long term activities over series of years. It therefore involves a sacrifice of present consumption in exchange of future benefits, hence people invest in the hope that the project cum investment will be able to deliver those expectations. It should be noted that if the investment is large, then the capital outlay is expected to be large. However, what might be deemed to be a large investment for a firm might turn out to be a minor investment for another firm.

Item Type: Book Section
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculty of Management and Social Sciences
Depositing User: mrs chioma hannah
Date Deposited: 02 Feb 2021 10:29
Last Modified: 02 Feb 2021 10:29

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