INVESTMENT APPRAISAL

Analysis of Investment appraisal Practices and Decision-Making Process

Analysis of Investment appraisal Practices and Decision-Making Process

Introduction

Investment decisions of companies are one of the main problems to be solved by financial managers. Assessment of investment projects requires sufficient attention on part financial managers. Currently, a large number of studies have been conducted to discover the aspects of the investment appraisal techniques and its effectiveness. Practical aspects of the investment appraisal practice and decision making choice involve considering various performance indicators of investment projects (Bakke & White, 2010). Decision making process of the company is driven by the role of possible areas for investment in various types of equity instruments; decision making is preferred for investments that are most effective in terms of achieving investment objectives (Wang, 2010). This research aims at examining the role of Investment appraisal Practices in defining the decision making process of the company.

Clarity on investment projects analysis requires considering the practical aspects (Arnold, 2000). In particular, the study focus on examining the implication of investment analysis practices on the decision making process of the company. The purpose of this paper is to systematize investment appraisal preferences in conducting empirical research in the field of investment analysis that affect the decision making process.

Proposed Research Title

The research will be undertaken in the field of investments evaluation and how does it affect the decision making process of the company. Therefore, proposed title for the research is as follows: “Analysis of Investment appraisal Practices and Decision-Making Process.”

Background of the Project

Various studies by researchers have been conducted on the practical aspects of chief financial officers preference for various performance indicators of investment projects. Pike (1996) first analysed the commitment of CFO to various performance indicators that was only to the description of choice (Carmichael, 2011). However, the reasons why CFOs make the choices were not considered in his study. The problems or issues that need to be sorting out involve addressing the following questions:

To what extent risk and uncertainty influence the change in investment decision?

How does the firm's decision-makers approach final decision for investment based on the qualitative gains of investment?

How do the firm's decision-makers involve the component of uncertainty, risk, and potential losses in investment appraisal practices?

It also explores how does decision making of the organization towards investment affects the organization performance. The effectiveness of investment appraisal practices to determine how it increases the competitiveness of the organization involves assessing the viability of investment appraisal methods, organizations financial capability and incorporation of risk and uncertainty component in the decision making (Rajagopalan, 2003; Wang, 2010).

I am interested in the project to explore the implication of investment appraisal practices in the maintaining the business competitiveness and decisions made by people. This research also aims at examining the impact of investment appraisal in enhancing the position of the company in the market with respect to competing companies approach towards business development by considering the qualitative factors associated with the analysis of investment appraisal ...