PPT: Investment Decisions | Financial Management & Strategic Management for CA Intermediate PDF Download

 Page 1


Module 2
? Investment Decision — Capital Budgeting Techniques — Pay Back
Method — Accounting Rate Of Return — NPV — IRR —
Discounted Pay Back Method — Capital Rationing — Risk
Adjusted Techniques Of Capital Budgeting. — Capital Budgeting
Practices.
Page 2


Module 2
? Investment Decision — Capital Budgeting Techniques — Pay Back
Method — Accounting Rate Of Return — NPV — IRR —
Discounted Pay Back Method — Capital Rationing — Risk
Adjusted Techniques Of Capital Budgeting. — Capital Budgeting
Practices.
What is an Investment? 
? In an economic sense, an investment is the purchase
of goods that are not consumed today but are used
in the future to create wealth.
? In finance, an investment is a monetary asset
purchased with the idea that the asset will provide
income in the future or will later be sold at a higher
price for a profit.
Page 3


Module 2
? Investment Decision — Capital Budgeting Techniques — Pay Back
Method — Accounting Rate Of Return — NPV — IRR —
Discounted Pay Back Method — Capital Rationing — Risk
Adjusted Techniques Of Capital Budgeting. — Capital Budgeting
Practices.
What is an Investment? 
? In an economic sense, an investment is the purchase
of goods that are not consumed today but are used
in the future to create wealth.
? In finance, an investment is a monetary asset
purchased with the idea that the asset will provide
income in the future or will later be sold at a higher
price for a profit.
Investment analysis, defined as the process of
evaluating an investment for profitability and
risk, ultimately has the purpose of measuring
how the given investment is a good fit for a
portfolio.
Investment Analysis
Page 4


Module 2
? Investment Decision — Capital Budgeting Techniques — Pay Back
Method — Accounting Rate Of Return — NPV — IRR —
Discounted Pay Back Method — Capital Rationing — Risk
Adjusted Techniques Of Capital Budgeting. — Capital Budgeting
Practices.
What is an Investment? 
? In an economic sense, an investment is the purchase
of goods that are not consumed today but are used
in the future to create wealth.
? In finance, an investment is a monetary asset
purchased with the idea that the asset will provide
income in the future or will later be sold at a higher
price for a profit.
Investment analysis, defined as the process of
evaluating an investment for profitability and
risk, ultimately has the purpose of measuring
how the given investment is a good fit for a
portfolio.
Investment Analysis
Capital Budgeting
? Capital budgeting is defined “ as the firm’ s formal
process for the acquisition and investment of capital.
It involves firm’ s decisions to invest its current funds
for addition, disposition, modification and replacement
of fixed ass e ts ”.
? Investment in fixed assets
? Benefits derived in future which spreads over no: of years
Page 5


Module 2
? Investment Decision — Capital Budgeting Techniques — Pay Back
Method — Accounting Rate Of Return — NPV — IRR —
Discounted Pay Back Method — Capital Rationing — Risk
Adjusted Techniques Of Capital Budgeting. — Capital Budgeting
Practices.
What is an Investment? 
? In an economic sense, an investment is the purchase
of goods that are not consumed today but are used
in the future to create wealth.
? In finance, an investment is a monetary asset
purchased with the idea that the asset will provide
income in the future or will later be sold at a higher
price for a profit.
Investment analysis, defined as the process of
evaluating an investment for profitability and
risk, ultimately has the purpose of measuring
how the given investment is a good fit for a
portfolio.
Investment Analysis
Capital Budgeting
? Capital budgeting is defined “ as the firm’ s formal
process for the acquisition and investment of capital.
It involves firm’ s decisions to invest its current funds
for addition, disposition, modification and replacement
of fixed ass e ts ”.
? Investment in fixed assets
? Benefits derived in future which spreads over no: of years
What is Capital Budgeting?
? Capital budgeting is the planning process used to
determine whether an organization’s long term
investments such as new machinery, replacement
machinery, new plants, new products, and research
development projects are worth the funding of cash
through the firm’s capitalization structure.