Fix investment and Monetary Investments

Investment appraisal techniques

1. Introduction

As defined by Cistelecan, L. (2002) investment is an “expenditure made now in order to obtain a successful future, making gains in the future”. Investment is an essential vital issue for companies, because it can ensure the growth and the development of the companies, and without it companies can’t survive in the competitive markets. (Katalininc, B. 2009)

There are two types of investment as stated by Virlics, A. (2013). These types are fix investment and monetary investments. Fix investments are tangible assets, such as buildings, machinery or a plant. On the other hand, monetary investments are stocks and bonds.

On another point of view and as stated by Götze, U., Northcott, D. & Schuster, P. (2008), investment can be categorized by the cause of the investment as the following:

Foundational investment.

Current investment.

Replacement investment.

Maintenance or repairmen.

Supplementary investment.

Expansion investment.

Change investment (e.g. rationalization, diversification).

Certainty investment.

Making the right decision to invest or not is not a simple process. Without a sound and clear image of the future of the opportunities, companies may go on bankruptcy. Another point, a lack of proper information about the investment may lead to wrong decisions, and therefore a well-defined method of investment appraisal is required.

The need for investment appraisal techniques in the process of decision making is justified by Katalinic, B. (2009) as the following:

New opportunities for the developing and the improvement of the company may be provided by a full analysis of the investment.

Investment is associated with the reallocation of resources and cash, which makes a carefu...

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