ABSTRACT
Events over the years have shown that investors present and potential wants to invest their funds in anticipation of good future returns investment appraisal techniques and its resultant making of decision is critical to all investors (both institutional and individual investors) aspiring to expand their investment income. The purpose of this write up arose from the need to determine whether: The theoretical investment evaluation techniques are being adopted by investment analysis in the appraisal of real life capital project. The net present value (NPV) criterion is widely accepted at the most reliable evaluation technique by investment analysts. Investment decision advice seekers are to further bring to light the theory and practice of decision-making criteria to the knowledge of students’ investors (present and potential) analyst. On the basis of the foregoing this research work was centered on investment/ finance house, which is a sub-sector of the finance. And most of research works were carried out in the case study of Union Bank PLC Enugu Urban.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF STUDY
The efficient allocation of capital is the most important finance function in modern time. It involves decision to commit a firm’s fund to the long-term assets. Such decision are of considerable importance to a firm or business organization since they tend to determine value and size by influencing its growth profitability and risk.Investment appraisal as it is sometimes called is a means of assessing whether capital expended on (or allocated to) a project would show a satisfactory rate of return to an undertaking either absolutely or when compared with expenditure on alternative project and of indicating the optimum time to invest.
To be above to give an efficient decision on investment profitability the analysts would require stick come in the evaluation process.All possible system of achieving this need are to be brought into consideration and bearing in mind attendant merits and demerits of each system or techniques relating some to the circumstance of individual project. He analyst should also be well equipped as to giving a reliable appraisal of such investment proposals.The implication therefore is the investment appraisal or evaluation can be carried out by more than one system or technique each possessing a particular merits and demerits which result in their respective feature and conditions for evaluation.
The cause of these individual feature merits demerits etc is the peculiar method (strategy) adopted by a particular system technique. This in the evaluation process the analyst would need to consider the nature and condition of my given project (investment) so as to know which of the techniques will appropriately be in match and after all be used in the appraisal process since it will give the most reliable appraisal criterion or basis.
1.1 THE INVESTMENT/FINANCIAL HOUSES (COMPANIES)
Investment is the ploughing one’s finance or funds into projects or assets (be it tangible or financial assets) with a view to increasing one’s wealth. In the same vein investment houses can be described as a financial institution or intermediaries whose chief function is or relates with the financing of project of capital nature and providing financial advisory service.
