In this article we will discuss about the mathematical analysis of firm’s capital investment project. The net present value of a project is equal to the sum of the present value of all the cash flows (inflows and outflows) associated with the project. NPV = Net present value, An = Cash flow occurring at the end of the year t [...]
This article throws light upon the top five methods used for reconciliation of differing optima of firm. 1. If the technical optimum is greater than the managerial optimum, the gap has to be covered by measures aiming at enhancing managerial efficiency. Or the firm has to split the productive organisation into different separate departments in order to take advantage of [...]
This article will guide you about how to calculate return on investment with the help of an example. Investment may refer to capital employed, total assets or owner’s equity or net worth. Again capital employed may be gross capital employed or net capital employed. Also, return may be pre-tax return or after-tax return. Return may be expressed in terms of [...]