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The Importance Of Capital Investment

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Capital investment decisions are essentially made by top level management such as the CEO or president of the company as this is where strategic decisions usually are conducted (Reference for Business, 2016). Therefore, capital investment decisions generally have to be made by the top executive level management individuals that are used to making decisions on investments that have a long term impact on the company’s performance and productivity. Additionally, capital investment decisions are made by top level executives because essentially, capital investment decisions have a significant long term effect on profitability and that is why the top level executives have more interaction with these types of decisions. Furthermore, capital investment …show more content…
Likewise, I look at capital investment decision making as more complex and the outcomes can be quite irreversible if made too irrational and requires individuals to have more knowledge of the overall standing of the organization. As to where day-to-day decisions can be made immediately and without a lot of precise and long term planning. Moreover, it is very important to recognize the impact irrational decisions can place on the strategies in place to deal with such issues and problems because essentially if you make one wrong capital investment decision, then it can impact a business value negatively thus making creditors and investors not really willing or eager to fund your business any time in future (Capital Investment, …show more content…
So, essentially, that would not be good for capital investment decision making because these decisions take a lot of thought and brainstorming as well as concise judgement and accuracy to yield the best results and ensure the best possible return on their investment. Therefore, the major goal of capital investment decision is to increase the value of firm by undertaking the right project at the right time (Finance World of Maps, 2016). The firm needs to decide which of the given investments will ensure the most value to the business.and not the daily day to day decisions that must be made and can be delegated to lower level

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