Finance Growth Essay Example | Topics and Well Written Essays - 2500 words

Finance Growth - Essay ExampleSuch decisions consist of allocation of the resources of the firms with conservatively laid out plans to recoup the initial investment as well as adequate returns in the form of hard currency flows or other benefits that ar expected to be generated during the economic life of the asset or investment. It is hard to reverse such groovy budgeting decisions without severely disturbing an organization economically or in any other manner. Therefore it becomes critically important for any firm to make its capital budgeting decisions after a systematic and careful analysis of all associated risks and issues. But it must be celebrated that the capital budgeting decisions are many sided analysis. The process of this analysis involves estimation and forecasting of the current and in store(predicate) cash flows and the economic evaluation of alternative projects on hand. Since in reality the cash flow estimations take emerge in a non-deterministic environmen t, full of complex interplay of conflicting forces, an exact description about cash flows is closely impossible(Chandra Prakash Gupta). Therefore it becomes important that the firm attempts to develop procedures and techniques that help the firm to make a meaty analysis and evaluation of all the alternatives available in its hands before any decision is interpreted to invest m one(a)y in any of the projects. This also makes the decisions of capital budgeting risky and difficult to retrieve.Capital budgeting is chiefly concerned with fairly large investments in long-term assets. The assets may be tangible like property, plan, and equipment or intangible like new technology, patents, or trademarks. Irrespective of the nature of the assets, the capital expenditures have two characters one is that they are meant to be a long term investment and secondly their benefits or cash flows are expected to be spread over many years. These characteristic features make the capital expenditure d ecisions actually important for a firm. The capital expenditure decisions since have a considerable impact on the organizations future cash flows there is a considerable