chapter  13
22 Pages

INVESTMENT APPRAISAL AND LONG-TERM DECISION-MAKING

When we considered short-term decision-making in Chapter 10 the majority of the decisions we dealt with were to do with revenue expenditure. By contrast, this chapter will examine long-term decisions based on capital expenditure that should help determine profits which reach into the future. Capital expenditure is different from revenue expenditure (labour and material costs) as it is generally concerned with the purchase of large capital items such as machinery, plant and equipment, land and buildings or even another organisation. The benefits of such expenditure should last for a number of years; hence they need to be quantified.