Dissertation Proposal Dissertation Proposal

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How can IRR help to determine the risk of choosing between two investments? The payback time period is also known as the problem solver in decision making. Evaluate

[Name of the Student] [Name of the instructor] [Date]

Dissertation Proposal Title How can IRR help to determine the risk of choosing between two investments? The payback time period is also known as the problem solver in decision making. Evaluate General description of the project

Dissertation Proposal

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The entire project would be based on the financial measures taken by organisations when they are planning to invest in different projects. Different capital budgeting instruments and methods will be used in this research. However, emphasis would be laid on core financial instruments which are known as internal rate or return and the pay back method. Similarly, the core aspect that would be discussed in this research is that how these methods are used by different organisations to evaluate the factor of risk in different investments. . .. . . . . . . . . . . . . . . . Background Organisations are enlarging their visions and with the advent of time they have transformed themselves into big powerhouses that possess immense power to influence different stakeholders that are present in a society. These organisations invest their reserves in different ventures to earn more and more profit so that they can be successful in both the short and the long run (Siegel 2007). Investments are actually associated with the scenario that they are a commitment of money to purchase financial instruments through which profit can be attained. Usually companies invest in different ventures like property, commodity, stocks, bonds derivatives etc. However, it can be said that the purpose of these financial instruments is to earn profit and maximise the financial strength of the company (Mayo 2006). Furthermore, investments are associated and treated as financial elements that are dealt by financial analysts and accounts so that they can be utilized in the best possible way. However, a broader of investments depicts that certain element of risk is always associated with investments and financial analysts opt for different methods so that they can curb the risk of financial investment in an organisation (Melicher and Norton 2008). . . . . . . . . . . . . . . . . . . . . . . . . . Literature Analysis

Dissertation Proposal

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Investments appraisals or capital budgeting methods are important aspects when it comes to minimizing the risks associated with the investments. The core aspect that is discussed in capital budgeting is of project selection and how organisations select an investment project when they have several options (Seitz and Ellison 2004). The main aspects of investment appraisals are Internal Rate of Return (IRR) and Pay Back. Internal rate of return (IRR) methods calculates the discount rate at which an investment present value of all the expected cash flows equals the present value of its cash flows that are expected. In simple terms it can also be said that IRR can be calculated when the Net Present Value of an investment option is actually zero. It is also known as the amount of profit an individual gets when they invest in a certain project (Peterson and Fabozzi 2002). However, IRR is calculated in percentages but in order to evaluate the risks factor in an investment it can be considered as one of the most feasible options. Besides that it can be said that another method that is equally important in this regard is that after how much time an individual or an organisation would get back its investment. Through number of years an individual or an organisation can easily calculate the element of risks involved in an investment (Dayanada, Irons, and Harrison 2008). Therefore, it can be said both these methods are quite important in gauging the risks that is associated when organisations are selecting projects. . . . . . . . . . . . . . . . . . . Objectives The objectives of the current research will to evaluate that what are the risks associated with investments and how IRR and other capital budgeting methods like Pay Back approach minimizes that risks. The objective of the research is a bit narrowed as it would focus on a scenario that how an organisation picks up a project when they have to choose between two. The research would look for empirical evidences and analysis of different organisations will be

Dissertation Proposal presented in this research. . . . . . . . . . . . . . . . . . . . . . Research Methods Research methods are of utmost importance when we have to evaluate or test a hypothesis. The approach that will be used in this research would be based on deducting reasoning. Two broad methodologies of research will be used in this research project which is known as qualitative and quantitative approach. However, emphasis will be laid on quantitative

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approach. However, case study approach will also be used in this research project. . . . . . . . . . . . . .............................................. The data that will be analysed in this research would be collected from both primary and secondary sources. The primary data analysis would focus on questionnaires and analysis of these questionnaires will be used in this research. However, secondary sources would incorporate case studies of different organisations that are using these techniques to evaluate the risks of their investments.

Schedule Key Activities Chapter:1 Introduction Chapter:2 Literature Review Chapter:3 Research Methodology Time-Scale One week 2 weeks 2 weeks

Dissertation Proposal Chapter:4 Findings and Analysis Chapter:5 Conclusion 2 weeks 1 week

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References Dayanada, D., Irons, R., & Harrison, S. (2008). Capital Budgeting: Financial Appraisal of Investment Projects . Cambridge University Press . Mayo, H. (2006). Basic Finance: An Introduction to Financial Institutions, Investments and Management . South-Western College . Melicher, R., & Norton, E. (2008). Introduction to Finance: Markets, Investments, and Financial Management . Wiley. Peterson, P., & Fabozzi, F. (2002). Capital Budgeting . Wiley. Seitz, N., & Ellison, M. (2004). Capital Budgeting and Long-Term Financing Decisions . SouthWestern College Pub. Siegel, J. (2007). The Definitive Guide to Financial Market Returns & Long Term Investment

Dissertation Proposal Strategies. McGraw-Hill.

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