Return on the investment, The premise is the idea that the

Return on the investment

Reference no: EM13752518

The premise is the idea that the cost of money (interest rates) will need to be less than a return on the investment. For example, if Company X borrows money to buy a new machine there is an expected increase in income associated with the purchase. For example, if the given costs to borrow money are 12% and the investment return is 8% the value of the firm is decreased. We'll expand on this concept by introducing the constraint that the amount of capital is limited. The priority of investment, for a financial perspective only, will be based on capital budgeting techniques to determine which projects will yield the highest return over time. You will need to apply factors to measure the net present value (NPV), internal rate of return (IRR), discounted cash flow (DCF) and payback period methods of measuring investment returns. As a finance manager you would have access to expected interest rates on any borrowing that may occur. A relationship with the banking community may ensure you receive the most affordable interest rate.

Please write a COMPLETE 1-page paper, double spaced that summarizes the following information above, and what you think of it.

Reference no: EM13752518

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