Complete Guide To Corporate Finance

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Capital Investment Decisions - Introduction To Capital Investment Decisions

Capital investments are funds invested in a firm or enterprise for the purposes of furthering its business objectives. Capital investment may also refer to a firm's acquisition of capital assets or fixed assets such as manufacturing plants and machinery that are expected to be productive over many years. Sources of capital investment are manifold and can include equity investors, banks, financial institutions, venture capital and angel investors. While capital investment is usually earmarked for capital or long-life assets, a portion may also be used for working capital purposes.

Capital investment encompasses a wide variety of funding options. While funding for capital investment is generally in the form of common or preferred equity issuance, it may also be through straight or convertible debt. Funding may range from an amount of less than $100,000 in seed financing for a start-up to amounts in the hundreds of millions for massive projects in capital-intensive sectors like mining, utilities and infrastructure.

In this section, we'll examine various components of a company's capital investment decisions, including project cash flows, incremental cash flows and more.

Project Cash Flows


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RELATED TERMS
  1. Capital Investment

    Funds invested in a firm or enterprise for the purposes of furthering ...
  2. Capital Flows

    The movement of money for the purpose of investment, trade or ...
  3. Capital Growth

    The increase in value of an asset or investment over time. It ...
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    Capital markets are markets for buying and selling equity and ...
  5. Capital Investment Analysis

    A budgeting procedure that companies and government agencies ...
  6. Capital Investment Factors

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RELATED FAQS
  1. What is the difference between capital investment decision and current asset decision?

    Learn how capital investment decisions are long-term funding decisions, while current asset decisions are short-term funding ... Read Answer >>
  2. How is working capital different from fixed capital?

    Understand the differences between working capital and fixed capital, including definitions and examples of how businesses ... Read Answer >>
  3. How does total capital investment influence economic growth?

    Discover the basic relationship between capital investment and economic growth, and why improving the capital structure increases ... Read Answer >>
  4. What is the difference between financial capital and economic capital?

    Read about the differences between types of financial capital, which companies use to raise money, and economic capital models ... Read Answer >>
  5. What role do shareholders play in a capital budget?

    Learn about why shareholders play an integral role in capital budgeting and how it benefits businesses to use equity capital ... Read Answer >>
  6. What types of capital are not considered share capital?

    Find out what types of capital are not considered share capital, including an explanation of the different types of share ... Read Answer >>

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