"Capital expenditure is extremely vital in financial decision - making."
Introduction : - Every individual or firm wishes to know how 'best' to invest money to attain the maximum gain . To achieve this objective ,a proper investment analysis is to be made . It involves the consideration of investment proposals , estimation of their cash flows, evaluation of cash flows , selection of the proposals based on some criterion and finally the continuous revaluation of these proposals (projects) .
TIME VALUE OF MONEY :- One of the basic concepts of finance is the notion that money has time value . This is because money today is more valuable than the same amount at some future date . We can always
put available funds to some use and make them grow into higher sums, so that a larger sum would be available later on . A rational decision - maker would not value the opportunity to receive some amount of
money now ,equally , with the opportunity to have the same amount of money at some future date .
This phenomenon is known as the decision maker's 'time preference of money' .
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