Discussion: Pay-Offs and Risks of Capital Investments
The three most important considerations in capital budgeting for long-term, high-expense projects are planning, evaluation of alternatives, and financing. These considerations should be a visible part of any strategic investment plan. Planning includes carefully considering the potential pay-offs and risks of a project. The evaluation of alternative projects or programs comes about through applying appropriate decision-making techniques. Because of the long-term life and high expense of capital projects, proper financing usually necessitates effective debt management. In this Discussion, you ascertain how capital investment decisions are made in a specific public organization. Then, you recommend a major capital investment for this organization and analyze the potential pay-offs and risks associated with it.
By Day 4
Post By Day 4 a brief description of a major capital investment, e.g., property, buildings, building additions, equipment, software, or technology that will last more than a year, that you might recommend for the public organization. Discuss how the use of cost benefit analysis could be use to determine if this investment is a financially sound one for the organization. Then, analyze its potential pay-offs and risks, and explain how the organization might mitigate those risks.