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Principles of Investment Decisions

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Business Taxation and Financial Decisions

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Abstract

This chapter focuses on fundamental concepts of decision making in capital budgeting and financing. These concepts – as described here – neglect taxes, but it is important to understand them to be able to follow the after-tax models in the following chapters. We assume that the content of this chapter is basically known from other courses. Therefore, we provide a very brief summary of the different concepts. Furthermore, we provide a justification for using the net present value concept as a Standard Model for investment decision problems. After reading this chapter, you are able to evaluate the profitability of different investment options. Moreover, you know the advantages and shortcomings of the decision criteria described.

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References

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Authors and Affiliations

  1. WHU – Otto Beisheim School of Management, Chair of Taxation and Accounting, Burgplatz 2, 56179, Vallendar, Germany

    Prof. Dr. Deborah Schanz

  2. Chair of Business Taxation, University of Magdeburg, Universitätsplatz 2, 39106, Magdeburg, Germany

    Prof. Dr. Sebastian Schanz

Authors
  1. Prof. Dr. Deborah Schanz
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  2. Prof. Dr. Sebastian Schanz
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Correspondence to Deborah Schanz .

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© 2011 Springer-Verlag Berlin Heidelberg

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Schanz, D., Schanz, S. (2011). Principles of Investment Decisions. In: Business Taxation and Financial Decisions. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-03284-4_2

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