TABLE OF CONTENT
Title
page
Certification
Dedication
Acknowledgement
Abstract
CHAPTER ONE
- Background of the study
- Statement of the problem
- Objectives of the study
- Research methodology
- Justification and relevant of study
- Scope and limitation of the study
- Plan of the study
- Definition of terminologies
CHAPTER TWO
LITERATURE REVIEW
- Introduction
- Activities
of financial institution viz-auiz the Ned to invest
- Capital
investment appraisal techniques
- The
effect of inflation in investments appraisal
- Impact
or taxation on choice of investment
- Investment
decision under capital rationing
CHAPTER THREE
GENERAL OVER VIEW OF THE FIRST
BANK OPERATIONS
- introduction
- Historical
background of the bank of Nigeria Plc
- Organization
chart of Frit bank of Nigeria Plc
- The
ivestructuring of the bank
- First
Bank century II projects
- The
vision and mission statement of the bank
CHAPTER FOUR
Data
presentation and analysis
- Introduction
- Result
obtained and interpretation
CHAPTER FIVE
SUMMARY CONCLUSION AND
RECOMMENDATION
References
CHAPTER
ONE
This chapter introduces the topic “effectiveness’ of capital investment appraisal techniques which is also called “capital budgeting techniques” in financial institutions. The study seeks to executive how First Bank of Nigeria Plc applies its investment (s) appraisal techniques.
The
first chapter deals with the background of the study statement of problems and
the objectives of the study. This chapter also examines critically, the
justification and relevance of the study, scope and limitation of the study and
finally, plan of the study.
- BACKGROUND OF THE STUDY
Investment could be described as the setting aside of the certain proportion of income or profit to generate additional or future returns. It could also tensed as the induction of available financial and natural resources into the economy top enhance further growth and development.
Investment constitution a source of fund to the receiver of such funds while it is an application of fund the provider Both the providers and the receiver of such may be individual organizations, government and other national and international investors.
Investment can be done in two ways vis: equity and loan stock, investment is the commitment of present day funds and resources into projects, activists and aspect which are expected to yield income in the future capital investment can also be said to be ersoucres which are capital in nature and as such can not be easily converted to liquid cash within a short period of time. While stock investment is the purchase of shares or bond in limited companies which are in corporated under the law and duly registered on the floor of the stock exchange.
This
shares or bonds are expected to yield dividends or interest either a fixed
rates of varying rates depending on the nature of the shares or bonds for
example ordinary shares yield vending fixed rate of interest wether the company declares profit or not, on the
other hand, debentures yield fixed rate of interest whether the company
declares profit or not.
Investment
is divided into two namely, long term investment and short terns investment.
Long term investments are mostly used to fiancé capital projects and short term investment are mostly used to fiancée working capital shortage.
There
are certain factors which influence capital investment decision; such factors
as propensity to save rte of interest on saving net cash that is currency in
circulation in the business environment rates of obsolesce in the productive
fixed assets. The opportunity cost the financial risks and other uncertainties
in the business environment and the profitability of the investment. These
variables make article evaluation of investment alternatives necessary in order
to maximize the wealth of the potentials investor.
The
decisions on when and how to utilize the available financial resources is taken
by proper investment appraisal. This can also be referred to capital budgeting
which is the production of the cost an return on invested as well as investment
of capital funds. It should be noted however that an elaborate investment as
appraisal would be needed when dealing with many numbers of individual routine
investments because the cost might not satisfy the means. For large companies,
an elaborate appraisal is need, skillful and complex fact findings one involved
these are often carried out by employing the service of experts.
It is imperative to emphasis the fact that an elaborate system of appraisal does not guarantee the source of an investment. Not withstanding, the decision. This is because the projections are made into the future in which a lot assumption is made. The decision based upon these evaluation techniques will give its management into maximizing the wealth of the share holders whose interest they represent, it is for this purpose that we are embarking on this study.
- STATEMENT OF THE PROBLEMS
Two
broad problems arise with investment appraisal the first is the result of not
applying capital investment appraisal techniques before making investment
decisions the second problem is the inability of the management to apply the
right method of appraisal.
These
problems are better expressed as follows:
- Inability to develop alternative
solution which may be due to lack of access to valid and reliable information
about investment.
- Inability
to complete on-going project, this problem is caused by misleading assessment of not ash
flow and capital rationing.
- Problem of not considering the
business environment factors during investment appraisal which include
political governments/legal social, cultural and international factors during
investment appraisal.
- The
difficulties of absolute inability to determine the basic solution to the
defined problems which might be due to the use of in appropriate investment
techniques.
- Mistake of identifying symptoms for
problems as the symptoms indicate the problems.
- OBJECTIVES OF THE STUDY
The
propose of studying is to identify the need for investment appraisal and the procedures
was to be applied by an organization for growth and development. This study
shall also demonstrated the various capital investment appraisal techniques as
adopted in First Bank Nigeria Plc and also review other capital investment
appraisal techniques, their merit and demerits their assumption and critical
for each at the techniques . The effect of the environment factors on the
choice of investment appraisal techniques a comparison between these factors
shall analyzed in this study.
- RESEARCH METHODOLOGY
The
method which will be adopted in carrying out this study includes questionnaire and
personal interview in some cases.
The
source of data available for obtaining information for the purpose of this
research are primary and secondary source which provide for all the necessary
information needed as far as the research working concerned.
The
information used in the research were from the main source. The first source is
the use of questionnaire administered personally on the respondent.
The
second source is an extensive interview of strategic management of First Bank
of Nigeria Plc.
1.5 JUSTIFICATION AND RELEVANCE OF THE STUDY
This study shall be great important to
individual and corporate bodies who are involved in capital investment
decisions making. This study will be used in the evaluation of capital project.
These
are projects with not only it will be useful in this area, but is will also
assist management to make proper decisions in the case of mutually exclusive project.
These are projects with different life span and capital rationing.
The
study will also be importance to non financial experts as it will provide
necessary guidance on how to gather the information from various source both
internal and external to the organization in considering the financing and
taxation implication to the project and decision making based on the analysis
students who may want to have a practical in sight on how appraisal techniques
are used in companies will also benefit tremendously from this study. The study
is still relevant to students who might wants to carryout research work on this
crucial topic.
- SCOPE AND LIMITATION OF THE STUDY
The
scope of the study will cover significant aspect of capital budgeting
including, the effects of inflation, taxation, risk, certainty and uncertainly
and capital rationing on investment decisions. The limiting factors to this
study are I adequate finance and non-availability of vital information which
were confidential to the bank.
- PLAN OF THE STUDY
The
first chapter of this study deals with the background of the study, statement
of problems and objectives of the study, it also examines justification and
relevant of the study, scope and limitation of the study’ plan of the study and
definition of terminology.
The
second chapter is a review of some relevant literate on the study. The review
include the conceptual framework and discussion on existing studies third chapter deals with the history profile
of the Organisation.this includes historical background of first Bank of
Nigeria Plc, organization structure (chart) mission and vision c statement of
the bank ad re-engineering strategy.
- DEFINITION OF TERMINOLOGIES
Investment appraisal:
This can be defined a the study and analysis of various investment,
alternatives with a view of selecting the cost option in which an organization
can part away with its immediate funds in anticipation of an expected flow
of future earnings over a period
of years.
Cost of capital: This
is the discount rate which when applied to a project cash flows streams would
determine whether the project is worth while or not. If a project NPV (Net
Present Value) is positive using the cost of capital as the discount rate, the
project should be accepted if a projects NPV ids negative, suing the cost of
capital as the discount rate, the project should be rejected.
Outlay:
This refers to the cost to purchase or to maintain the necessary assets and to put them in use.
Initial outlay: This
is the immediate cash out flow used to obtain the required assets and to put in
use
Cash flow:
It is a phrase meaning the actual movement of cash in and out of enterprises.
Cash flow or positive:
Cash flow is the cash received that is found coming into the business from
operation some example are, project revenue, government grant etc.
Cash of out flow:
Otherwise known negative cash flow is the period out, this are expenditure that
are in cured by investment in an
organizations, some example are, initial cash outlay, labour cost, materials
cost etc.
Net cash flow:
It is the different between the total net cash in flow and total net cash out
flow.
Risk:
This is described as the possibility that the objectives may not be realized
that is, the uncertainty as to the occurrence of an economic loss. Risk is unpredictability,
the tendency that actual result may differ from predicted result. It is the
possibility of an unfortunate occurrence. It is the change of loss example are,
interest rate risk, risk of default, price level risk, business risk, finance
risk, and market and operation risk.
Capital asset pricing model
(CAPM): This is also used in calculating, it is a method
used on calculating the cost of equity capital base on the need to adjust for
risk. The model states that the required return on any project depending any of
level of risk calculated.
Weighted average cost of capital (WACC): acting cost of capital. It shows minimum rate of return provide capital.
CAUSES IMPLICATIONS AND PREVENTION OF FRAUD IN NIGERIA BANKING INDUSTRY
