Date: 2008-06-05
Level: Bachelor Thesis in Business Administration EF0703, 15 ECTS Credits.
Authors: Longinus Duru (Stockholm), Francis O.Oluduro (Västerås) and Mofid Al Jaafar (Västerås)
Title: Capital Investment Procedures for FEMYSO
Problem Area: Undertaking an investment by FEMYSO involves weighing up the risk
against the returns but still capital investment decision are still one of the most undertaken
decisions by organization managers because it involves commitment of huge amount of
money, which will affect the business over time. FEMYSO is embarking on a capital project
at the hearts of Brussels but there is still a problem associated with the profitability of such
venture.
Purpose: The purpose of this study is to provide Capital Investment guidelines and
procedures for FEMYSO and to show how it can maximize profit through decision-making.
Furthermore show the role of risk and interest rate in the investment.
Methodology/Design/Approach: This paper used theoretical framework of existing
investment theories to assess investment opportunity for FEMYSO and other organizations.
The role of Mintzberg et al. Rational model of decision-making in investments was analyzed.
This research paper went further to provide deeper insights into capital investment process by
evaluating the net present value of an investment and determining the risk associated with
investments.
Research Limitation/Implications: This study is limited to FEMYSO and other nonprofit
organizations that want to assess Capital Investment Projects.
Conclusion and Result: The more you wait to earn a dollar, the more heavily you
discount for it because of the time value of money. Good management decision in FEMYSO
and other related organizations will lead to profit maximization. The time value of money
problem can be solved by heavily discounting for the present value. Profitability of capital
projects will depend on the future interest rate, which is uncertain and subject to risk.
Västerås: Mälardalens högskola , 2008. , s. 37