Original Research

Risk analysis and evaluation of capital investment projects

J. H. Hall
South African Journal of Economic and Management Sciences | Vol 4, No 2 | a2650 | DOI: https://doi.org/10.4102/sajems.v4i2.2650 | © 2018 J. H. Hall | This work is licensed under CC Attribution 4.0
Submitted: 06 July 2018 | Published: 30 June 2001

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J. H. Hall, Department of Accounting and Finance, University of Pretoria, South Africa

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Abstract

In determining the feasibility of projects where capital investments are concerned, various methods are used. The focus of these methods is on return per se, so it is often asked to what extent any of these methods take the risk concept into account. The main objective of this study was to investigate the importance of risk with regard to capital investment projects. Secondly, with the aid of an empirical study, the study tried to establish whether risk is incorporated when South African companies evaluate capital investment projects. The empirical analysis indicated that risk analysis and evaluation in practice are to a large extent neglected by South African companies. It was found that nearly a quarter of companies estimate their annual cash flows using management subjective estimates alone.

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Crossref Citations

1. Capital budgeting techniques employed by selected South African state-owned companies
John H. Hall, T. Mutshutshu
Corporate Ownership and Control  vol: 10  issue: 3  first page: 177  year: 2013  
doi: 10.22495/cocv10i3c1art2