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Capital Investment Appraisal

In: Review of Management Accounting Research

Author

Listed:
  • Elaine Pamela Harris
  • Moataz El-Massri

Abstract

Capital budgeting or investment appraisal is concerned with organizational management decisions about which projects or assets to invest in and how to finance them to achieve corporate goals. The background to this area of management accounting started by defining this as a routine part of the budgetary control system, hence the label ‘capital budgeting’ still used in many texts and organizations today. Investment appraisal techniques traditionally applied the principles of economics to asset replacement and expansion decisions, largely ignoring the wider context of strategy formulation and implementation; thus, non— financial factors and risk levels were not always fully appraised. Whilst this may have suited the relatively stable manufacturing environments of the post—war Anglo—American countries, it has become far less suitable in recent times and other international contexts.

Suggested Citation

  • Elaine Pamela Harris & Moataz El-Massri, 2011. "Capital Investment Appraisal," Palgrave Macmillan Books, in: Magdy G. Abdel-Kader (ed.), Review of Management Accounting Research, chapter 14, pages 343-377, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-35327-5_14
    DOI: 10.1057/9780230353275_14
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    Cited by:

    1. Elmassri, Moataz Moamen & Harris, Elaine Pamela & Carter, David Bernard, 2016. "Accounting for strategic investment decision-making under extreme uncertainty," The British Accounting Review, Elsevier, vol. 48(2), pages 151-168.
    2. Josefine Rasmussen, 2020. "The Role of Structural Context in Making Business Sense of Investments for Sustainability–A Case Study," Sustainability, MDPI, vol. 12(17), pages 1-25, August.

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