Investment Appraisal Decision Making

Investment Appraisal Decision Making 1. INTRODUCTION The research is undertaken in the partial fulfillment of degree of MBA. The dissertation focuses on the investment appraisal in the Indian hotel industry. Shareholders and Creditors invest capital in an enterprise in the hope of gaining a return. For loan creditors they require interest plus a return of their capital, while shareholders require dividends and maintenance or increase of share prices. The capital invested is channeled through the enterprise and invested in capital projects, which must generate returns commensurate with the expectations of the providers of that capital. Capital investment within any organization is crucial and important for the organizations well being and long time survival. Capital investments are those which have long-term effects on the organization by providing benefits over a number of years. This dissertation also shows the different types of investment appraisal and shows the company where to invest and where to not invest. Questionnaire is desig ned to collect primary data along with secondary data collected during literature review. Conclusions will be based on the basis of data collected from questionnaires. Secondary data and recommendations will be presented that will enhance the decision making process made in the Indian hotel industry by the investment appraisal methods. 2. OVERVIEW OF INVESTMENT APPRAISAL Capital expenditure decisions are crucial to the long-term viability, success and survival of a company. Capital investment appraisal provides a framework in which capital projects can be considered, screened and evaluated. Because of the inflexible nature of capital projects, risk and uncertainty, and environmental change, e.g.; the tax factor, changes in government policy and technological change, it is essential that they are carefully selected, to ensure that they will help the organization to achieve its objectives. Therefore, Investment decision is one of the key decision areas of financial management. An investment decision can be defined as one that involves the firm making a cash outlay with the aim of receiving, in return, future cash inflows. Decisions about buying a new machine, building a factory, extending warehouse, improving a delivery service, instituting a staff training scheme or launching a new product line are all examples of investment decisions that need to be made by the industry. In order to make such decisions and to ensure that they are consistent with each other, a common method of appraisal is required which can be applied equally to the whole spectrum of investment decisions and which should help to decide whether any particular investment will assist the company in maximizing shareholder wealth. Therefore, investment appraisal methods cannot replace managerial judgement, but they helps to make that judgement more sound. Investment appraisal is also referred to as ‘capital budgeting (Lumby. S, 1988). The decision making consists of different stages: Planning Identifying the alternatives to be considered and their transformation into workable proposals. Appraising the alternatives and selecting the best one with regard to the organ isations goals. Implementing the decision. Reviewing the selected investment project (RÃ ¶hrich. M, 2007). 3. RESEARCH AIMS OBJECTIVES Every organization has problems in its investment areas, so an appropriate investment appraisal is required to solve these problems.The role of investment appraisal is to ensure that appropriate information is gathered relating to the investment alternatives. Capital investment decisions allocates resources within the organization to offer the best potential of meeting its objectives. It maintains and improves profit performance and increase market share. It achieves a balanced product portfolio. Investment appraisal methods are relevant to all decisions that form part of the investment planning process. Understanding different investment appraisal methods, their assumptions, limitations and possible usages will lead to an increased understanding of different decision making and an informed choice of methods. This should greatly enhance decision making in regard to both single investment projects and investment programmes. It enhances various alternatives to use different methods of investment appraisal to make business decisions. It also develops higher order skills through having to consider other factors, apart from quantitative methods, that a business might have to consider in making business decisions. The main goal of long term decision making is that the firm must handle the investment in order to earn profits greater than the funds committed. In order to handle these decisions, firms must have to make an assessment of the size of the outflows and inflows of funds, the lifespan of the investment, the degree of risk attached and the cost of obtaining funds. The main focus of this research is to analyze the decision making process made in the Indian hotel industry by the investment appraisal methods. Taj Residency Plc, Abad Plaza Plc are the hotels in India which are included in this research. This dissertation will try to answer following questions using investment appraisal methods depending on problems identified during the analysis and searching for a lternatives. Key considerations in making investment decisions are: Should an investment be undertaken or rejected? In the case of mutually exclusive investment projects, which one should be preferred? For how long should n investment project should be utilized? When should the investment project be started? What is the scale of the investment can the company afford it? How long will it be before the investment starts to yield returns? Which of the investment projects should be preferred and carried out when limited financial budget restricts the number that can be undertaken t the same time? How long will it take to pay back the investment? What are the expected profits from the investment? Could the money that is being ploughed into the investment yield higher returns elsewhere? Does the proposed investment fit in with the organizations strategic objectives? What are previous proposals to see which techniques the organization uses? How the organization allows for risk and inflation in investment proposals? Which investment appraisal techniques would the companies wish to consider for making long term investment decision? Investment appraisal in the Indian Hotel Industry Hotel Industry in India has made tremendous boom in the recent years. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The hotel industry and tourism industry in India are straightly linked to each other. Revenues of Hotel and Restaurant (HR) industry in India during the financial year 2006-07 was INR604.32 billion , a growth of 21.27% over the previous year, primarily driven by foreign tourist arrivals ,which increased by 14.17%. at present, there are 1,980 hotels approved and classified by the Ministry of Tourism, Government of India, with a total capacity of about 110,000 hotel rooms. The tourism industry is showing excellent performance, in terms of foreign tourists arrival. It is estimated that over the next two years 70,000-80,000 rooms will be added across different categories throughout the country. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The cheaper airlines rates to India has also made growth in the domestic and international tourists which helped the industry very successfully. In recent years the Indian government has taken several measures to boost travel tourism which have benefited hotel industry in India.Investments in tourism infrastructure are essential for Indian hotel industry to achieve its potential. But instead there are few challenges faced by the Indian Hotel industry. They are lack of cost structure, shortage of efficient manpower, shortage of resources etc, so an appropriate investment appraisal is required to select and monitor the investments properly. The hotels which are included in this research are Taj Residency Plc, Abad Plaza Plc. Taj Residency Plc is a five star hotel which is situated in Cochin, kerala, India. Its a hotel which consists of 108 rooms including 12 spacious suites. The hotel provides all the services for the customers. The hotel is situated near to the sea, so it focuses mainly on international tourists. The Taj Residency Group is focusing on building a new hotel under the same name in another place in kerala, India. Abad Plaza Plc is a five star hotel which is situated in Cochin, kerala, India. Its a hotel which consists of 80 fully furnished luxury rooms. The hotel provides much more quality services for the satisfaction of customers. Warmth and hospitality has always been the strong points of this hotel. It is located near to the railway station and close to bus station as well. The hotel is trying to expand the business by way of building another hotel in another city in kerala, India and they are planning to extend the existing hotel into more bigger one in order to build more rooms and provide more service facilities to customers. So, a good decision must be made by using efficient investment appraisal techniques in order to invest in the right place and in the right time. 4. LITERATURE REVIEW OF INVESTMENT APPRAISAL An investment is ‘any course of action that involves sacrifices now or in the near future in anticipation of higher future benefits (Pike and Neale, 2003). Investment appraisal is influenced by the fact that external shareholders and potential investors have access to accounting data and make their estimates of firms economic rte of return with accrual-based accounting numbers. As a result, there is a continuing history of research analysing and relating accounting rate of return and economic rate of return concepts. Accounting information affects investment appraisal in many ways (Danielson Press, 2003). There are four basic techniques for the appraisal of capital investments which are : Payback (PB) measures the time that it will take to recover the total funds invested in an project. It shows the time required for the total cash inflows to equal the total cash outflows. A Project is considered attractive if it has short payback period. Projects with short payback periods allows managers to recuperate their investment quickly and give them more flexibility to reinvest these funds in future. They also have fewer risks than projects with longer payback periods. The payback period is popular method to evaluate capital investments. The shorter the payback period is, the more desirable the investment. Because the payback period focuses on short-term results, it does not require managers to predict cash flows far out into the future. Accounting rate of return (ARR) measures the percentage return the project achieves over its life in terms of profitability. Accounting rate of return is often used internally when selecting projects. It measures the performance of projects and subsidiaries within an organization. ARR is almost similar to payback period method but the important difference is that it tends to favor higher risk decisions, whereas use of the payback period leads to overly conservative decisions(Broadbent. M, Cullen. J, 2003). Internal rate of return (IRR) measures the percentage return the project achieves over its lifetime in discounted cash flows. The advantage of using IRR method is that it does not consider the time value of money and therefore is more exact and realistic than the ARR method. The shortcomings of this method are that it is time consuming to compute (Shim. K. J, 2000). Net present value (NPV) compares the initial cost of the project with the future discounted cash flows it generates. It allows the company to screen the company projects potential profitability by discounting future cash flow expectations and comparing the sum of these cash flows to the initial capital expenditure required to fund the project. Though similar to IRR method, NPV does not calculate an investments exact rate of return but instead calculates the exact dollar amount that an investment exceeds, or fails to meet , the expected rate of return. NPV provides an excellent decision criterion for investments. NPV does not suffer from any of the drawbacks of the payback or IRR methods. NPV is the method most recommended by financial experts for making investment decisions. IRR is still used to determine the exact rate of return for an investment, but NPV has none of the problems that IRR have with unusual investments (McAllister. E. W, 2005). 5. RESEARCH METHODOLOGY A research design provides a framework for the collection and analysis of data (Bryman and Bell, 2007). Data is divided into four types; secondary, primary, quantitative and qualitative. Selection of data type depends largely on the type of research (Buckley, 1995). The research objectives justify that descriptive research is the best method to achieve research objectives. The methods used in this research to collect primary data are as follows: Questionnaire It is a commonly used technique in quantitative research methods. The main benefit of using questionnaire to collect primary data is that it collects data in a format that is easy to analyze. The questions to be asked in the questionnaire are dictated by the research objectives. Questionnaire provides good sampling control and flexibility and control with regards to location and time. It is time consuming if several segments are involved. The research undertaken will use questionnaire to collect primary data. The mainrationale behind choosing questionnaire is that the research requires the controlled responses from the individuals. Time limitation for the dissertation also supports the selection of questionnaire for primary data collection as it is less time consuming to conduct. Personal interviews A Personal interview is defined as a purposeful discussion between two or more people (Kahn and Cannell, 1957). The data collected using personal interview is very reliable. Interviews can be un-structured or structured (Saunders et al, 2007). Structured interviews are a systematic goal oriented process. They force organized communication between the knowledge engineer and the expert. A structured interview is a question and answer session, which is recorded in some way. Personal interviews provide the visual verification of respondents characteristics and references to sources can be used to verify facts. However, personal interviews may be expensive and difficult to arrange. Also respondents may formulate the answers depending upon their profiles.

Social Media Essay

Writing Assignment: Social Media Essay. 3-4page paper: This paper is in three parts: 1) Discuss the social media in general, what it is, who uses it, how does it affect business; Social networking sites are based on the internet using by the computer, smartphone, or tablet that you able to access through Wi-Fi from anywhere. Companies use for improve teamwork or close to customers. Friends and families able to share pictures or greeting messages even they far apart. Everyone able to receive and share their personal interest and updated news. The social media is based on the internet with virtual communities that allowed people to share information, picture, or video. Definitely, social media does have more positive affect for individuals and companies. Today, however, there are always two sides of a coin. The individual account with social media is highly risk for security with person information. Facebook, blogs, wikis, RSS feeds, and podcasts are some of the social media that companies use to inform and persuade the public, to generate goodwill, and to build a positive brand awareness. 2) How do you use social media? Like and what I don’t like to use The great thing on the social media is a real-time update news. Another my favorite from the social media is sharing pictures within specific groups or public. However, most social media sites are connected world-wide. So it is never stop updating the message. Without self-control, it could disrupting personal daily task and routine. Also, social media sites using mostly slangs with comments such as lol, sth, asap, or more. Moreover, people use bullying or bitter word to hurt someone with anonymously comments. And, it has possible to reveal personal private life to unknown person who could use  for voice phishing. For example, my friend’s sister had phishing scam last year when she travel with friends. She posted some pictures on social network site that she was not in home. By somehow, the swindler found out and called their parents to asked ransom. 3) What are the different interesting and out of the way conversations going on in social media– that the general public may not know so much about– Also, discuss various mediums and methods to get one’s message across. For example, YouTube – advertising longer than public advertisement on television. What are the advantages and challenges? Also, how would you proceed with your virtual company using social media? Through social media for our iContol, I like to have announce experiential marketing for free to use about three to six months our product and first 100 people. Furthermore, our company can keep in touch with those 100 people’s feedbacks about product and service. In the conclusion, discuss which medium is preferred and why, how would you maximize its effects? Due Week 8 (submit under Week 8 Assignments)

Faculty Evaluation System

A proposed Faculty Performance Evaluation System for university of the Visayas-Dalaguete† Problem Statement The Faculty Performance Evaluation System will seek to answer what enhancement and design the school can adopt for a more effective and efficient automated System. Our project will provide the benefits and help the school to collect the feedback from the students and provide security and privacy respectively. Specifically, it endeavors to answer the following questions: 1 .Why is there a need to replace the manual system with an automated one? . What will be the benefits of having the automated faculty performance evaluation system In the university of the Visayas – Dalaguete? 3. How can automated faculty performance evaluation system help the school? 4. How can we provide security to our system? ED: What are the first steps that SIG schools and districts should take when re- thinking their teacher evaluation systems? CD: First, there needs to be an Intense dialogu e with faculty members about what constitutes good teaching.They need to develop a shared understanding of what is good practice. They can do a book study hat defines good teaching in a coherent way, what it looks like, and what counts as evidence of good teaching. I've worked on a framework for effective teaching. The big Idea that underlines this framework is that students learn from high levels of student intellectual engagement. There's a ton of research on that, but it's hard to do because In general, students aren't taught that way. The challenge Is to get people to understand how to engage students in learning.Second, there needs to be an effort to create a culture in the school around continued learning and professional inquiry. You're not done learning when you start teaching. Teaching is enormously complex work that people work to master over their entire careers. No one should act like it's easy because It's not. Then, teachers can move to on the ground work with students . They can analyze student work for levels of student engagement. If they have money to spend, they can get equipment to videotape themselves teaching to use for self- reflection. tx a powerful technology because teachers can watch their own lesson, observe other teachers, share their practice, and engage in dialogue. ED: Are there t Of2 speclTlc cnallenges In Implementing a tnougntTul evaluatlon system In low- erforming schools? CD: Not really. It's the same challenge, Just harder. One of the problems in low-performing schools is that teacher turnaround is higher, which means they could have more novice teachers. Beginning teachers, because they are inexperienced, need more intensive supervision and coaching than do their more experienced colleagues.It's essential that both the teacher and the district ascertain whether they are a good match. On the flip side, of course, new teachers frequently come with a lot of energy and enthusiasm for the work, and that can make a real contribu tion to a school. But the higher level of supervision by a principal takes time, and that's one of the issues with any evaluation system – finding the time to do it well. I don't think it's helpful or harmful. It's Just the nature of it. There's also the school culture element.Let's say you're my principal and a typical observation is one where you come in, observe my lesson, write it down, and tell me what I did wrong or right. l, as a teacher, have done nothing. If the school culture is one of inspection, then all I would want to do is to â€Å"get through† the evaluation. I'm not going to try anything interesting in my class while you're there. That typical process of where my role as a teacher is passive. There's no learning for me as a teacher. Creating a different type of culture is a leadership challenge.For the new teachers not to be performing at the same level as experienced teachers – that's natural. The culture should be one where professional growth and learning are understood to be part of everyone's Job forever, and learning is not a sign of deficiency. To have an effective teacher evaluation system, you need good, trained evaluators and more time from teachers and administrators to discuss performance and improve teaching and learning. ED: What about the problem of resources, especially in times of budget cuts?How do schools and districts keep their commitment to this type of a teacher evaluation system? CD: I don't think it's a resource problem. It's a prioritization problem and also a training issue for evaluators. When a teacher or union activist says that principals don't know what they are doing when theyre evaluating teachers, they are usually right! One of the things I'm working on is an actual evaluator certification program. The need for credentialing evaluators has been written into state law in a few places including Illinois and New York.

Cultural Evolution And Population Growth - 1372 Words

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