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

1. INTRODUCTION                                                           1
   1. STATEMENT OF THE PROBLEM                                 2
   1. OBJECTIVE OF THE STUDY                                        3
   1. SIGNIFICANT OF THE STUDY                                     4
   1. SCOPE OF THE STUDY                                               4
   1. PLAN OF THE STUDY                                                  5
   1. RESEARCH METHODOLOGY                                      5
   1. 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

1. 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.

1. STATEMENT OF THE PROBLEMS

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

1. to make or buy decision
2. to purchase a new machine or replace the old one
3. to introduce a new product or to cancel the formal     product line
4. whether to sell off or process farther
5. 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

1. 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.

1. 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.