Value Maximisation Approach or Maximum net present worth. According to this approach , financial management should take such decision’s which increase net present value of…

The evaluation of capital expenditure proposals involves the comparison between cash outflows & cash inflows. The pecularity of evaluation of capital expenditure proposals is that…

The investment decisions of a firm generally known as capital budgeting or capital expenditure decisions. A capital budgeting decision may be defined as the firm’s…

Investment decision require special attention because of the following reasons: 1) They influence the firm’s growth in the long turn. 2) They affect the risk…

It may be grouped in the following two categories:- (A) Discounted cash flow (DCF) Criteria. Net present value (NPV) Internal Rate of Return (IRR) Profitability…

These techniques are considered good because they take into account time value of money. (1) Net Present Value (NPV) This method take into account time…

Under this method the pay back period of each project/ investment proposal is calculated. The investment proposal, which has the least pay back period is…

This method is also called Accounting Rate of Return Method. This method is based on accounting information rather than cash flows. There are various ways…

Risk exists because of inability of decision maker to make perfect forecasts. Forecasts cannot be made with perfection or certainity since the future events on…

To allow a risk, businessman required a premium over and above an alternative which was risk free. Accordingly, more uncertain the returns in future, the…