Finance Assignment
Task II.
The importance of having a formal capital investments process
-Survival, a going concern
-Long term from an economic point of view
-Financially viable
-Must have Formal Step by Step process
-You have to develop the long-term goals on the organization
-Must have the ability to appraise and also to value different projects
-Stakeholders (shareholders, costumers, employees)
-Innocent owned by Coca Cola. Good example of real world. (Healthy product) L’Oreal bought body shop for reputation. (Another good example from real world)
-Seek out new projects/investments is not necessary to invest in the nature that you are in, you can choose another one
- Estimate future cash flows
-Ensure that information is transferred to all involved; many decisions have to be made in investing a new project (Decision making, you need the information)
- Monitor and control expenses
-Make an objective and transparent decision
-Why is it important? -/
Capital budgeting process
Stages in the capital budgeting process
-Initial investigation into the proposed project
-Detailed evaluation
-Authorization
-Implementation what is necessary who takes respons.
-Project monitoring –cost, benefits
-Post completion audit
