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Corporate Investment Decisions
book

Corporate Investment Decisions

by Michael Pogue
August 2010
Intermediate to advanced
196 pages
4h 16m
English
Business Expert Press
Content preview from Corporate Investment Decisions

Chapter 5

Risk and Uncertainty

A typical capital investment project evaluation requires many input variables including, inter alia, sales revenues, operating expenditure, project life, interest rates, and residual values. Some of these variables may be estimated with a relatively high degree of confidence, whereas others may exhibit high levels of uncertainty. The degree of uncertainty is also likely to be a function of both the type of project and the industry within which the firm operates. For example, investments of a strategic nature are generally more problematic for industry sectors such as oil and gas.

Large, capital-intensive projects in the oil and gas industries require substantial—and mostly risky—investments in the acquisition, ...

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Publisher Resources

ISBN: 9781606490648