AN ASSESSMENT OF CAPITAL INVESTMENT DECISION IN BUSINESS ENTITY (A CASE STUDY OF GLOBAL SOAP AND DETERGENT INDUSTRY LIMITED ILORIN KWARA STATE NIGERIA)

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AN ASSESSMENT OF CAPITAL INVESTMENT DECISION IN BUSINESS ENTITY (A CASE STUDY OF GLOBAL SOAP AND DETERGENT INDUSTRY LIMITED ILORIN KWARA STATE NIGERIA)

TABLE OF CONTENTS

TITLE PAGE PAGE

CERTIFICATION I

DEDICATION II

ACKNOWLEDGEMENT III

TABLE OF CONTENTS V

CHAPTER ONE

INTRODUCTION 1

STATEMENT OF THE PROBLEM 2

OBJECTIVE OF THE STUDY 3

SIGNIFICANT OF THE STUDY 4

SCOPE OF THE STUDY 4

PLAN OF THE STUDY 5

RESEARCH METHODOLOGY 5

DEFINITION OF THE TERMINOLOGY 6

CHAPTER TWO

LITERATURE REVIEW 16

INTRODUCTION 16

CONTROLLING DECISION 20

ORGANIZATION DECISION 20

STAFF DECISION 21

MOTIVATION DECISION 22

THE EVALUATION DECISION 22

CAPITAL EXPENDITURE DECISION 23

SELECTION OF RELEVANT DATA FOR DECISION MAKING 24

USING COSTING DECISION MAKING 25

COMPREHENSIVE INCOME APPROACH 25

DIFFERENTIAL ANALYSIS APPROACH 25

FINANCIAL ACCOUNTING 26

IDENTIFY RELEVANT DATA FOR SPECIAL DECISION 26

PURCHASING A NEW EQUIPMENT 27

REFERENCES 37

CHAPTER THREE

RESEARCH METHODOLOGY 38

INTRODUCTION 38

SAMPLE SIZE 39

SAMPLE TYPE 39

HISTORICAL BACKGROUND OF THE STUDY 40

METHOD OF GETTING DATA (PRIMARY AND SECONDARY) 42

CHAPTER FOUR

DATA PRESENTATION ANALYSIS AND INTERPRETATION 45

4.1 INTRODUCTION 45

4.2 CAPITAL BUDGETING DECISION 46

4.3 SCREENING TESTS 48

4.4 THE NET PRESENT VALUE METHOD 48

4.5 CALCULATION OF IRR BY LINEAR INTERPRETATION 54

CHAPTER FIVE

SUMMARY CONCLUSION AND RECOMMENDATION

SUMMARY OF FINDING 56

CONCLUSION 57

RECOMMENDATION 58

LIMITATION OF THE STUDY 59

BIBLIOGRAPHY 61

CHAPTER ONE

INTRODUCTION

Capital investment decision is a business entity is a function of the top management in an organization the taking of decision to in primary is predetermination of organization goal and constant evaluation of the feasible strategies used for attainment of goals and objective. This decision involves the commitments of capital into investment or projects that have long term span, or allocation of capital to long term asset, that would yield benefit in the future. Due to the fact that future benefits are uncertain, investment decision involve risk and uncertainty. Therefore investment proposals should be evaluated in terms of both return or profit and risk, these two factors affect the firm’s market value.

The process of planning and managing a firm’s long term investment is referred to as capital budgeting, which would be treated later in this book. One of the function of the financial manager is to evaluation the expected cash inflows, that is cash expected to receive from investment when the cash is expected (the time) and compare it with expected cash outflow, that is expenditure on the investment. Also the financial manager is expected to evaluate the size, timing and risk of future cash flows before the final selection of investment/ projects.

This Procedure involves the lower management level whose const functions is to evaluate project to provide profitable in formations which forms the basis for judgment by the top management in under taking their function in progressive circle of planning evaluation and control of investment proposals for the attainment of organization goals.

STATEMENT OF THE PROBLEMS

Management is faced with a lot of problem in it’s capital investment decision making such problem include

to make or buy decision

to purchase a new machine or replace the old one

to introduce a new product or to cancel the formal product line

whether to sell off or process farther

price fixation on a special order e.t.c

since there exist many alternative course of action or techniques managers are expected to evaluate and use the various available strategies in order to get most profitable alternative.

Also managers are faced with such implementation problem such as:

i Determination of adequate amount of capital expenditure for each project work

ii The control needed to meet up the product start

iii The control required to meet the target time

OBJECTIVE OF THE STUDY

In carrying out such function managers are faced with risk and consequently to meet the required production standard and loss of profit.

Failure to achieve such organization goal head to liability to stand amongst industrial competition and consequently to short down the industry.

There fore, the aims of this research work is to look at strategies and criteria adopted by global soap and detergent manufacturing company which have resulted into their success or failure and to make reach in to writer text to enable researcher recommend profitable techniques for selecting investment implementation.

In this research works, the each have explained and example the techniques for selecting relevant data for investment proposal and evaluate of controls adopted by Global manufacturing company and recommendation of writers of textbook and class lectures are also explained in this work.

SIGNIFICANCE OF THE STUDY

This topic chose for this research work is vast the researcher in much interested in this project topic to enable him to look in to the causes of success and failure of present system in business entities

However, a vigorous resource work has to be undertaken to enable the researcher achieve predetermined objects.

Moreover, Global soap manufacturing company are of the surviving business entities in this action data necessary for the study. Information and data necessary for the purpose of this destination.

This has tremendously economized the scare resource of time and money with the effort to audit the capital investment affairs and managerial decision function to the company.

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