Investement Decision Flashcards
1
Q
Steps of Investment Process
A
1 . Stimulation
- Detailed Description
- Compilation of all possible Alternatives
- Preselection
- Preselection
- Realization
- Regulation
- Monitoring / Verification
2
Q
Stimulation
A
- Internal
- External
3
Q
Detailed Description
A
- Objectives
- Technical Specification
- Estimation of Costs
- Estimation of the Impact on Profits
4
Q
Compilation of all possible Alternatives
A
- Leasing vs. Buying
- Make vs. Buy
- Alternative Distribution Channels
5
Q
Preselection
A
- Detailed analysis, rough Preselection and Evaluation
6
Q
Realization
A
- Acquisition
- Utilization phase
7
Q
Regulation
A
- Controlling System to check-up, to be able to achieve the Investment Objectives
8
Q
Monitoring / Verification
A
- Action Control
- Results Control
9
Q
What is an Investment?
A
Capital expenditure
Payment-flow or assets oriented definition of capital expenditures
10
Q
Two sides of a Balance Sheet
A
Left: Assets
Right: Liabilities
11
Q
CE influence on the performance of the company
A
- Long-term time frame
- capital lock up
- rigid cost structure
- high quantity of data associated
- Scarcity of funds- Wrong decisions have a strong impact on the operating result
12
Q
Types of Investment decisions
A
- Singular investment decision
- Selection decision
- Replacement decision
- Decision concerning the optimal point in time for replacement
- Decision on useful life expectancy
13
Q
Two main methods of reinvestment analysis
A
- Static Techniques
- Dynamic Techniques
14
Q
Dynamic Reinvestment Analysis: Points of criticism
A
- Problem of uncertainty
- Problem of attribution
- Problem of rate of return
- Decision problem
15
Q
Net Present Value
A
Value of cash flows discounted to the beginning of the planning period.
Income = Sum(income_t * (1+I)^-t)
