oa South African Journal of Economic and Management Sciences - Risk analysis and evaluation of capital investment projects
|Article Title||Risk analysis and evaluation of capital investment projects|
|© Publisher:||University of Pretoria|
|Journal||South African Journal of Economic and Management Sciences|
|Affiliations||1 Department of Accounting and Finance, University of Pretoria|
|Publication Date||Jun 2001|
|Pages||398 - 411|
|Keyword(s)||Capital investment projects, Economics, Empirical analysis, Finance, Inflation, JEL, M 21, Risk analysis and Risk factors|
ISI Social Science
In determining the feasibility of projects where capital investments are concerned, various methods are used. The focus of these methods is on return per se, so it is often asked to what extent any of these methods take the risk concept into account. The main objective of this study was to investigate the importance of risk with regard to capital investment projects. Secondly, with the aid of an empirical study, the study tried to establish whether risk is incorporated when South African companies evaluate capital investment projects. The empirical analysis indicated that risk analysis and evaluation in practice are to a large extent neglected by South African companies. It was found that nearly a quarter of companies estimate their annual cash flows using management subjective estimates alone.
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