INVESTEMENT APPRAISAL A GUIDE TO EFFECTIVE MANAGERIAL DECISION A CASE STUDY OF SELECTRED MANUFACTURING COMPANY IN
ABSTRACT
This project work is based on “investment appraisal a guide to effective managerial decision” A case study of selected manufacturing companies in Nnewi Anambra state. These companies are Chikason group, Ebeto group and luis carter industries. Inited. This research work of investment appraisal is to help investigate the problems in selecting improper investment, and to know if investment appraisal is needed and to know the impact of investment appraisal towards managerial decision. Five research questions and four hypothesis were employed. The statistical tools used to analyze the data convent analysis. Tradition a non discounting techniques and ,discounted cashflows techniques. Chi –square techniques was adopted to measure the difference between a swt of observed frequencies and histogram was used to show the results. It was found that investment appraisal in organization encourage workers to a greater extent. Investment appraisal helps organization in analyzing it’s financial position. Other finding include the fact that investment appraisal are responsible for the promotion recognition and maintenance of organizations. The implication of this findings is that without investment appraisal many organization cannot meet the demands of the populace. It was recommend that the managers of every organization should adopt proper investment appraisal programme to enable them get the best out of their employees and that government should adopt some incentives measures reduce the cost of capital and encourage the young investor ot invest wisely.
TABLE OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose of the study
1.4 Significance of the study
1.5 Research question
1.6 Hypothesis
1.7 Scope of the study
1.8 Definition of the study
CHAPTER TWO
2.0 Literature Review
2.1 Research questions / hypothesis / theories
2.2 Current literature on theories models hypothesis and research question
2.3 Summary of literature review
CHAPTAER THREE
3.0 Research methodology
3.1 Design of the study
3.2 Area of the study
3.3 Population of the study
3.4 Sample of the study
3.5 Instrument for data collection
3.6 Validation of the instrument
3.7 Distribution and retrieval of the instrument
3.8 Method of data analysis
CHAPTER FOUR
4.0 Data presentation
4.1 Finding
4.2 Finding and discussion
4.3 Discussion of finding
CHAPTER FIVE
5.0 Summary, conclusion and recommendation
5.1 Summary of finding
5.2 Conclusion
5.3 Recommendation
References
Appendix A
Questionnaires
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
As business in this modern generation are growing rapidly and becoming more competitive among other investment (long run investment). Decision involves the acquisition of machinery, vehicles, buildings, patent right, new product line, copy right research and development and so on are critical decision facing managers of today’s business. however, these exists a greater task to the management when it comes to conflicting decision as regards to the selection of projects to embark on.
Under these circumstance, the management is left with series of potential projects with pregnant risk and returns. Given that the resources are limited in supply, the investor are bound to consider many factors before selecting a particular investment.
Investment is the key word to every established firm, organization both private and public make decision on projector investment at hand overtime, as managers that make decisions about a variety of specific investment, one could say that the organizations performance in any particularly year is the combined result of all the investment under way during the year.
Therefore, investment is any scheme of investing resources, which can reasonably be analyzed and appraised as an independent unit. This in-depth analysis and combination between the movements of cash outflow and cash inflow decision is known as investment appraisal.
The aspect of investment that leads to capital expenditure decision should be evaluated or appraised properly. Therefore, this research is prepared to study the investment appraisal as a guide effective managerial decisions. Appraisal of investment is one of the key drives of business financial system. Sound investment that implemented well founded strategies are essential to creating shareholders wealth and must appraised both in a proper content and with sound appraisal techniques. Under this aspect, an economic trade-off must be made between the resources of cash benefits to be obtained. Analyzing this trade is essentially an appraisal process that makes an economic assessment of combination of positive and negative cash pattern. This task is difficult because it deals with future conditions subject to uncertainties and risks.
Nevertheless, investment appraisal is of paramount importance of all investment both large and small some investments are beneficial during their early stage with high returns, however these cash inflow are not adequately maintained from such project or investment during the maturity periods. With these developments, the investors, workers, and management are not motivated with such result.
Therefore, without a planned scrutiny of the investment, management decision will be jeopardize and management standard and policy will be instable.
Having established these facts, far an effective investment appraisal the following factors and steps must be religiously considered.
a Project identification
b Project evaluation
c Project selection
The selection of an alternative should be determined by the use of these appraisal techniques
NON DISCOUNTING CASH FLOW TECHNIQUES
i Payback period
ii Accounting rate of return.
B DISCOUNTING CASH FLOW TECHNIQUES
i Net present valve (NPV)
ii Internal rate of return (IRR)
iii Profitability index (PI)
The application of cost analysis should be employed to determine the cost of capital and hurdle rate where discounting approach is the organization policy. The expected coupled with the uncertainties or riskness associated with the investment for an in-depth comparative analysis, with the investment for an in-depth comparative analysis with these rules and principles, managerial decision stand at the best alternative to maximize the organizational profit.
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