Capital Investment Issues and Challenges
The Present Chapter
It discusses the various issues and challenges which are faced by the businesses while taking capital investment decisions.
Introduction
Capital budgeting would be easy in a world without agency and information problems. The decision maker would simply calculate a project’s IRR and compare it to the cost of capital. But in reality, these problems are inevitable because funds providers for investment have to must rely on management (agents) to identify and invest in long-term projects for expected returns. As a result, the quality of capital allocation depends on how effective the decision process is by way of agency function.
Various decision procedures are employed in ...
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