Investment decisions are treated both within finance, accounting, strategic marketing, and manufacturing strategy. The finance people teach us to discount the future and the marketing people perhaps the growth-share matrix or some other matrix technique.
This book maintains the doctrine that these and other techniques for the appraisal of capital investments view the problem from different points of departure. Therefore, it is not a question of what technique is the correct one but which decision situation they are to be used and how the result is to be interpreted.
The book clarifies important assumptions behind the techniques and develops a more general theory of capital investment appraisal, which offer both a more comprehensive and realistic view of the appraisal of capital investments, a a framework for choosing appropriate techniques. It is intended both for researchers interested in the development of new techniques for the appraisal of capital investments, and to supplement existing textbooks on capital investments.
Integrating existing techniques for investment appraisal with distinctive decision situations in connection with different types of capital investment and presents a rough outline of a contingency theory of capital investment under uncertainty. Presents and categorize existing models for investment appraisal and for handling of uncertainty. Discusses a few discrepancies between theory and practice, identifying some fundamental weaknesses in existing models. Defines a number of distinct decision situations, discussing distinguishing between financial and capital investments; the phases of a project; the key issues and planning horizon of a firm; the use of soft and hard data; and different investment criteria. Surveys definitions of risk and suggests a few principles to cope with uncertainty.