Capital Budgeting and Investment Decisions

Abstract

Investment decisions are of vital importance to all companies, since they determine both their potential to succeed and their ultimate cost structure. Investments usually entail high initial cash outflows and thus tie up substantial funds. Sound investment decisions are important, therefore. Yet, due to a highly complex and rapidly changing business environment they remain a challenging management task. Effective appraisal methods are valuable tools to support investment decisions. The following chapter explains characteristics of investment projects and discusses investment planning, provides an overview of concepts and methods and the didactical approach of this book. The decision models are then used throughout the book.

Further Reading – Part I

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• Brealey, R. A., Myers, S. C., & Allen, F. (2014). Principles of corporate finance (11th ed.). Boston: McGraw-Hill/Irwin.

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