Week 10 Dicussion
Discussion: Pay-Offs and Risks of Capital Investments
The three most important considerations in capital budgeting for long-term, high-expense projects are planning, evaluation of alternatives, and financing. These considerations should be a visible part of any strategic investment plan. Planning includes carefully considering the potential pay-offs and risks of a project. The evaluation of alternative projects or programs comes about through applying appropriate decision-making techniques. Because of the long-term life and high expense of capital projects, proper financing usually necessitates effective debt management. In this Discussion, you ascertain how capital investment decisions are made in a specific organization. Then, you recommend a major capital investment for this organization and analyze the potential pay-offs and risks associated with it.
With these thoughts in mind:
BY DAY 4
Post a brief description of a major capital investment, e.g., property, buildings, building additions, equipment, software, or technology that will last more than a year, that you might recommend for the organization. Then, analyze its potential pay-offs and risks, and explain how the organization might mitigate those risks.
Be sure to support your posting and responses with specific references to the Learning Resources.
Learning Resources
Required Readings
MIKESELL, J. L. (2014).
FISCAL ADMINISTRATION: ANALYSIS AND APPLICATIONS FOR THE PUBLIC SECTOR (9TH ED.). BOSTON, MA: WADSWORTH.
- CHAPTER 7, “CAPITAL BUDGETING, TIME VALUE OF MONEY, AND COST-BENEFIT ANALYSIS: PROCESS, STRUCTURE, AND BASIC TOOLS” (PP. 299–337)
- CHAPTER 15, “DEBT ADMINISTRATION” (PP. 634–675)
MIKESELL, J. L. (2014).
FISCAL ADMINISTRATION: ANALYSIS AND APPLICATIONS FOR THE PUBLIC SECTOR (9TH ED.). BOSTON, MA: WADSWORTH.
- CHAPTER 7, “CAPITAL BUDGETING, TIME VALUE OF MONEY, AND COST-BENEFIT ANALYSIS: PROCESS, STRUCTURE, AND BASIC TOOLS” (PP. 299–337)
- CHAPTER 15, “DEBT ADMINISTRATION” (PP. 634–675)