A literature review on Capital Investment Decisions Essay

A literature review on Capital Investment Decisions - Essay Example Some experienced investors feel that while making investments decisions it is very important to have a personal involvement rather than admitting a broker. The Global Investment Institute [2007] observes that relying on brokers will lack attention towards the account section, which seems to help a lot in increasing the returns of investments. In addition to that it says, â€Å"You need to become familiar with each stock you have in your portfolio so that you can make decisions on your own in the short-term, while still relying upon your financial advisor to structure your portfolio with a mix of the right instruments (stocks, bonds, money market, etc.) to help you make money in the long run†.Global-Investment-institute.com [2007]. Investment decision making is not an easy job, as the people involved in decision-making process have to calculate the previous income statements of the company or business is addition to evaluating all the accounts report and statistical details of the profit and loss of the company. Capital investments decisions have to be prepared relying on the returns and analysing whether the investment would be profitable. However, they are found to be useful in terms of â€Å"formulating long term goals†, â€Å"recognition of statistically dependent proposals†, â€Å"estimation and forecasting of current and future cash flows† etc observes [fao.org 2007] in addition to this fao.org initiates the economic evaluation of the investment proposals as another important aspect of investment decision making. The investment alternatives also have to be considered in order to make the decision in a profitable way. The investment analysis plays a very important role as a precautionary step in decision-making as there appears to be risks in returns, which would be acting as a major drawback in the financial conditions of a business or a company. There are instances of wrong decision-making in which there might be either lack of organised