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ACKNOWLEGDEMENT

It is a pleasure to record my thanks and gratitude to persons and organizations whose


generous help and support enabled me to complete this project within the stipulated
time period. My special thanks to Dr. T. V. Raman (Faculty Guide) for his active
help and support in making us understand the importance of the project and without
whom preparation of this report would not have been possible.

I am also thankful to Dr. Sanjeev Bansal (Director) for giving me the opportunity to
work on this project.

I am thankful to everyone who has helped us in some way or other in completion of


the project.

Ankita Sharma
A0101912137
MBA-G
Batch-(2012-14)
Amity Business School, Noida

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DECLARATION
Title of Dissertation Report:
Analysis of Investment Decision making in a company - A study on Capital
Expenditure
I declare that

(a) the work presented for assessment in this Dissertation/ Company Report/ Minor
Project is my original work, that it has not previously been presented for any other
assessment and that my debts (for words, data, arguments and ideas) have been
appropriately acknowledged;

(b) Work conforms to the guidelines laid by the University, and

(c) Plagiarism for this report has been checked using _______________________
software and is ___________ %. The summary of report is attached along with for
reference.

Date:

Ankita Sharma
A0101912137
MBA-G
Batch-(2012-14)
Amity Business School, Noida

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CERTIFICATE

This is to certify that Ankita Sharma student of Masters of Business Administration


General at Amity Business School, Amity University Uttar Pradesh has completed
the Dissertation on Analysis of Investment Decision making in a company - A study
on Capital Expenditure, in Partial Fulfilment of the Requirements for the Degree of
Master of Business Administration General under my guidance.
The report has been checked for the plagiarism and it is acceptable.

Dr. T. V. Raman
Associate Professor
Department of Finance

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Analysis of Investment Decision making in a company


- A study on Capital Expenditure

Abstract

Financial decision making involves analyzing the financial problems that the
company faces and deciding which course of action should be taken in order to solve
the problem. As a decision maker, a manager must be able to use the analytical
techniques of financial analysis. The role of financial analyst may be assumed by any
manager. To make financial decisions the manager must be able to identify potential
financial problems and analyze the effects of alternative courses of action. Managers
at every level must make difficult financial decisions continuously. Analytical tools
and techniques are important in decision making, analysis, planning and control.
Aspects of financial management are performed by most managers today, and it is
important that managers must be able to apply analytical techniques to their specific
financial problems or decisions.

The investment decision relates to the selection of assets in which funds will be
invested by a firm. This means the decision maker should decide that whether to
invest in short term assets or in long term assets that would yield the benefits in
future. Future benefits of investments are difficult to measure and cannot be predicted
with certainty. Because of the uncertain future, investment decisions involve risk.
Investment proposals should, therefore, be evaluated in terms of both expected return
and risk. So these decisions are very important for the organisation as huge amount of
money is involved and it is difficult to alter such decisions.

This project focuses the importance of investment decision making in a company and
what is the behaviour pattern of manager while making such decisions in a company.
For this a questionnaire is being prepared and the results were generated from 15
managers.

Contents
CHAPTER 1: INTRODUCTION .................................................................................. 1
1.1 About the topic:........................................................................................................ 1
1.2 Investment Decisions ............................................................................................... 2
1.3 Financing Decisions ................................................................................................. 3
1.4 Dividend Policy Decisions ....................................................................................... 4
1.5 Capital Expenditure ................................................................................................. 5
1.6 Methods of Capital Budgeting ................................................................................. 6
1.7 NPV v/s IRR ............................................................................................................ 8
1.8 Attitudes towards Risk ............................................................................................ 8
1.9 Investment in changing Business Cycle .................................................................. 9
CHAPTER 2: LITERATURE REVIEW ..................................................................... 12
CHAPTER 3: RESEARCH METHODOLOGY AND PROCEDURES .................... 16
3.1 Purpose of the Study: ............................................................................................. 16
3.2 Objectives of the study: ......................................................................................... 16
3.3 Source of Data:....................................................................................................... 17
3.4 Research Design..................................................................................................... 17
3.5 Data Collection ...................................................................................................... 18
3.6 Limitations of the study ......................................................................................... 18
CHAPTER 4: DATA ANALYSIS AND FINDINGS ................................................. 19
4.1 Basic findings after interviewing with mangers: ................................................... 19
4.2 The Questionnaire .................................................................................................. 20
4.3 Results from cross tabulations31
CHAPTER 5: CONCLUSION, FINDINGS AND RECOMANDATIONS ............... 35
5.1 Conclusion ............................................................................................................. 35
5.2 Findings.................................................................................................................. 36
5.3 Recommendations .................................................................................................. 37
REFERENCES: ........................................................................................................... 38
ANNEXURE: .............................................................................................................. 40

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List of Tables

Table: 4.2.1 Willingness to take financial risk.....20

Table 4.2.2 Kinds of constraints...21

Table 4.2.3 Possible losses or possible gains...22

Table 4.2.4 Degree of risk in past........23

Table 4.2.5 Changes in investments.........24

Table 4.2.6 Degree of risk in future.....25

Table 4.2.7 Funds available..26

Table 4.2.8 Expected average annual rate of return.........27


Table 4.2.9 Capital Budgeting Techniques .....28

Table 4.2.10 Changes in business cycles ....29


Table 4.2.11 Which business cycle .30

Table 4.3.1 How the managers rate their financial risks in different business cycles..31
Table 4.3.2 funds available with managers in different business cycles..32
Table 4.3.3 Expected Returns in different business cycles..33

Table 4.3.4 constraints in different business cycles.34

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