REAPPRAISAL OF MATHEMATICAL PROGRAMMING APPROACH TO CAPITAL BUDGETING DECISIONS
REAPPRAISAL OF MATHEMATICAL PROGRAMMING APPROACH TO CAPITAL BUDGETING DECISIONS
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Date
1988-04
Authors
AHMED, ALI OTHMAN
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Abstract
There could be many reasons why most investments in capital
projects fall below expectations in developing countries. But
one vital reason is the lack, or ignorance of an appropriate
method of analyzing such investments before taking decisions.
In aijy -investment, decision problem, the choice of technique
of analysis is as important as taking the final decision. This
is because a particular technique could be best for some
circumstances and yet be worst for other circumstances. However,
in-spite of changing circumstances, investment decision makers in
Nigeria seem to be conservative over the methods they employ.
It is in the light of the above problem that this work
examines the Mathematical Programming Approach to Capital
Budgeting with the hope of identifying a particular model that
could, with little or no alteration, be most appropriate for
Nigeria.
Since the models were formulated with developed countries
in mind, a survey of the characteristics typifying capital
budgeting problems in developing countries was undertaken in this
work before forming a clear picture of what qualities a model
must possess to pass as ideal. Based on these characteristics,
the Stochastic Goal Programming Model was found to be relatively
better than any existing model. To make it most appropriate,
however, certain modifications are suggested in the model to
incorporate the effects of the rapid and unpredictable changes in
factors affecting Capital Budgeting that are observed to be
common in Nigeria.
Description
Being a Research Dissertation Submitted to the
School of Post Graduate Studies, Ahmadu
Bello University, Zaria in partial fulfillment
of the requirement for the award of
Masters of Science degree in Accounting and Finance
April 1988
Keywords
REAPPRAISAL,, MATHEMATICAL,, PROGRAMMING,, APPROACH,, CAPITAL, BUDGETING,, DECISIONS