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Capital Investment Decisions & Termloans
What is capital investment decision in the context of banking?
Capital investment decision refers to the process of allocating long-term funds to projects or assets that are expected to generate returns over a period exceeding one year. It involves evaluating the viability and profitability of proposed investments.
What is the difference between capital expenditure and revenue expenditure in banking?
Capital expenditure creates long-term assets; revenue expenditure is for short-term operations.
What does Net Present Value (NPV) represent in capital budgeting?
NPV is the difference between the present value of future cash inflows and the initial investment outlay, discounted at the required rate of return. A positive NPV indicates that the investment adds value to the firm.
What is the Time Value of Money concept used in capital budgeting?
A rupee today is worth more than a rupee received in the future.
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