TABLE OF CONTENTS
Table of content
1.0 General Introduction of the research
1.2 Statement of the research problem
1.3 Objective of the study
1.4 Significance of the study
1.5 Scope and Limitation of the study
1.6 Research methodology
1.7 Organisation of the study
1.8 Definition of term
1.9 The general hypothesis
2.0 Literature review
2.1 Literature review
2.2 Decision making model for capital
of investment worth, appraisal techniques
2.4 Tax implication on investment appraisal
2.5 Effect of inflation on capital investment
2.6 Significance of investment appraisal
Methodology and case study
background of UBA Plc
of the methodology
design and appraisal
of data collection and data analysis
of population and sampling techniques
of data collection
of the research question and hypothesis
presentation and analysis
5.0 Summary, Conclusion and
References and bibliography
1.0 GENERAL INTRODUCTION OF THE
modern economy, there are varieties of different enterprises, varying in size
from a single entrepreneur to the multinational corporation in an activities
methods of finance form of organization marketing strategies and so on.
However, all these entrepreneur have one basic aim which is to utilize
resources to best achieve the firm goal or objectives. The word ‘firm is used
in a general term to encompass the decision making unit which is engaged in the
transformation of input into outputs.
investment decision of the firm is generally known as capital budgeting or
capital investment decision. Investment decision are those decision that
involve current outlays in return for a stream of benefits in future years. In
another word, investment decision include the firms decision to put its current
fund in the longterm assets in anticipation of an expected flow to benefit over
a series of years;
firm’s investment decision will include expansion, acquisition, in organization
and replacement of the longterm assets decisions, other activities like
research and development, advertisement, change in method of distribution and
so many also be evaluated as investment decision thus investment in fixed and
current asset is one single activity.
investment decision normally represent the most important decisions that a bank
makes because, a substantial proportion of a bank product are committed to
action that are likely to be irreversible and this also make it imprerature for
the banks to plan its investment programmes very carefully.
firm invest hundred of billions of naira each year. A good decision can boost
earing sharply and increase the price of firm stock while a bad decision can
lead to bankruptcy such decision are applicable to all sector of the economy,
either public or private sector which includes the banking industry.
investment decision is the most crucial and most important of the three
decision when it come to the creation of value. In other words investment
decision normally represent the most important decision that an organization
makes, since of commit a substantial percentages of its resources to action
that are likely to be irreversible.
important to appreciation that there are number of criteria that could be
employed in making management decision but the significance of investment
appraisal technique in decision making cannot be over emphasized.
appraisal techniques serve both financing and investment decision. There is a
need to look at the various alternative available and choose that will yield
1.2 STATEMENT OF
research is carried out with a view to testing the effectiveness of investment
appraisal techniques in management decision making, many desirable investment
project are not undertaken as a result of shortage of funds leads to capital
rationing in many project with positive NPV are rejected (Net Present Value)
this is the method of evaluating the investment proposals.
1.3 OBJECTIVES OF
The study is aimed at providing general preview of
investment decision making processes in banking industry. This entails how the
project are initial analysed.
Another objectives of the study include
ascertain the significance of investment appraisal techniques.
tax implication on investment appraisal and risk, uncertainly on investment
1.4 SIGNIFICANCE OF
study will be most, relevant to the managers of organizations in determine the
choice of investment project among various investment opportunities or
student or intending researcher may find it useful as references or basis of
their further enquires as other areas needing investment will be pointed out in
the course of the study.
1.5 SCOPE AND
LIMITATION OF THE STUDY
The scope of this study will cover capital investment
decision in manufacturing companies and banking industry otherwise know as
“Capital budgeting any other investment decision may be mentioned in the study
but special emphasis shall be land on capital investment decision i.e. longterm
information apart firm the case study (UBA) and as the result the study may be
limited or constrained reluctancy in giving the required information by the
management of UBA, be cause of the urgency this research work is limited by
time constraint and there is shortage of found to carryout my investment.
nature of this study permit the use of both primary and secondary data the
secondary data will be predominantly used.
because of primary data were to be used, information may not be secured due to
the strictness of the UBA in disclosing secret and relevant information on
capital investment decision in manufacturing and banking industry and they are
product of various appraisal techniques.
data are kind of data that has already existed some where or which other
researchers have worked on the secondary data which shall be collected from
either published, text books, journal or library.
1.7 ORGANIZATION OF
The structure of the research work is divided onti five
Chapter one (the introduction) this will deal with general
introduction of the research.
Chapter two (literature review) is the study that will
shield light on the works of different authors researcher in related fields and
review of every journal and literature that related and relevant to the
three (Research methodology) it will show method of data collections and how
they are going to be analyzed and qualified using chi-square statistics, brief
history of the case study, United Bank of African Plc.
four (Data analysis and presentation) it will contain presentation of result,
text of hypothesis, it also cover the interpretation of result.
five (Summary, Conclusion and recommendation) which is the last chapter is
going to summaries the research work and recommendation will be made leased or
1.8 DEFINITION OF
rate of return (ARR); it is a method of using accounting information as
reviewed by financial statement to measure the profitability of an investment.
techniques; this is a criteria for measurement of investment worth.
budgeting, this is complex theoretical area which involve investment and
of capital: The project cost of capital is the minimum acceptable rate of
return on funds committed on the project
factor: It is an appraisal criteria that takes into consideration true value of
Present Value (NPV): This is the class is economic method of evaluating the
investment proposals. It is one of the discounted value of money.
This is the process of committing fund to a particular project in anticipation
of flow of benefits.
index (PI): It is a time adjusted method of evaluating the investment proposal.
It is otherwise known as benefit cost (BIC) ratio.
The general hypothesis to be tested in this study are: Ho,
investment appraisal technique will not have positive impact on management
Hi: Investment appraisal techniques will have positive
impact on management decision making.
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