Accounting for capital investment appraisal

Time for a radical change?

Elaine Harris, Thinh Hoang and George Ngan


The thinking behind accounting for capital investment decisions (CIDs) has not developed greatly since the 1950s when present value tables were created (Bromwich, 1976). An increasingly widespread use of computing generally and spreadsheets specifically in the 1970s made discounted cash flow (DCF) methods the financial tool of choice for most organisations (Haka, 2007, p. 705–706). Critics of this narrow economics-based view of CIDs have preferred to position investment appraisal as part of a wider strategic management activity, where non-financial considerations and managerial judgement play an equally important part ...

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