Short Communication
Evaluering van Kapitaalprojekte
Submitted: 28 October 2022 | Published: 28 February 1970
About the author(s)
J. J. Pretorius, Yskor, South AfricaFull Text:
PDF (7MB)Abstract
Advancing technology has made capital investment an important problem in many companies. Since investment decisions may have serious effects on the company’s liquidity, operational flexibility and profits, they require careful analysis. Investment proposals having different time patterns of savings or earnings are not comparable unless outlays or receipts associated with the alternative proposals are converted to their equivalent amounts at a common point in time. This conversion is accomplished by discounting future cash flows to a chosen date, using an appropriate rate of interest.
This article illustrates the utility of the present worth technique in evaluating alternate proposals.
Keywords
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