Long Term Investment Decisions Essay

Long term jacket conclusions involve choosing how to finance commodious term projects. For a movie rental company, such decisions would include first step new shops in new marts or buying new machinery that would alter the truehearteds technology. Before making such decisions, a pissed has to do an analysis of the chase aways that the new project would bring against the court expense of the project. There atomic take 18 several slipway of doing such an analysis. They include the vengeance period, net present value, internal rate of return among early(a)s. The main cipher of conducting this analysis is to determine whether the expected returns meet a certain regulate benchmark, usually higher than the risk free return. Rationale for political science discussionThe United States goernment intervenes in origin processes in a cast of ways it has formulated ruler that governs the film dissemination industry to visualise a train playing field, ensuring employee protec tion, protection of the environment etcetera. For instance, there ar laws that govern advertising. These laws argon set to ascertain that advertisers are truthful and candid in their adverts. To protect the rights of employees, the government regulates issues such as the minimum take payable to an employee, the maximum working hours and a good working environment.In addition, the government has put measures that regulate waste man come onment and protection of the environment. through with(predicate) the environmental protection agency, the government guarantees businesses comply with environment protection regulation in order to protect the environment (Graham et al, 2010). Why Government legislation is neededGovernments in all countries in the world regulate business for both economic and social reasons. In the recent past governments puzzle continually regulated businesses for economic reasons mostly to prevent falling productiveness especially in developed economies. So cial regulation is practiced in order to command businesses comply with the social or the moral scene of the public. For instance in a movie rental company, the government would engage regulations that restrict distribution of pornographic and other banned films or limits the distribution to only the age appropriate groups (Khan & Jain, 2004).The main reason why a government is formed is to protect the rights of its citizens. There are a number of rights that if not protect may exceed to social unrest. A government should ensure that property rights are enforced to ensure that the producers leap from their ticklish labor. In addition, the government should ensure the kind of media that is on sale is age appropriate. It should protect kids from content that may not be appropriate to them. For example, humble kids should not be allowed to access pornography or content that is passing violent.Another reason why a government should regulate businesses is to ensure a level playing ground for all dissolutes. Because of the disparities in few resources a dissolute may possess an unfair advantage over other firms. In order to ensure that an industry is competitive, the government has to ensure that the industry has a level playing field and call for to be regulated. For instance, in the movie industry, the government may come in to light upon cartels that form in order to influence the prices of production and the distribution channels. Specifically, a government can put in place regulations that liberalize the market and break such cartels.In addition, the government has a moral arrangement to protect the environment by ensuring that hazardous material is properly disposed. In a movie rental company, there are a cud of technological wastes generated. Lack of proper disposal of pcs and other such like materials that cause cancer to humans may lead to increase in incidents of cancer. Therefore, the government must come up with measures that ensure that the re are proper disposal mechanisms for such waste. The benefits of a unitingThere are a lot of advantages that blockbuster would enjoy as a turn out of forming a merger. One of the greatest advantages of forming a study is that blockbuster would enjoy the economies of scale as a result of operate as a larger company. Economies of scale occur as a result of reduction of average costs as a result of increased output. In addition, the merger can help blockbuster earn diversification. For example, blockbuster can merge with firms that provide a different process from what it offers. By doing so, block buster allow for obtain access to friendship and expertise that may help the firm gain competitive advantage.However, the advantages of forming a merger depend on a number of factors. Specifically, the success of a merger depend on the scope of economies scale created, effects on monopoly power, and the effects on cost. However, due to the threats, blockbuster chooses to pursue its expansion picture by cracking investment. Capital projects are long term investments that are made to build on, or improve a capital intense project. A project that is capital intensive requires the input of considerable hails of capital especially financial and labor to start and run. They also require a lot of planning and resources. There are a number of ways that a firm can finance capital projects. Before determine the best way to finance capital projects, a firm should seek to determine the costs, the viability of the investment and the stream of returns from the investment.Despite the advantages of forming a merger, there are a lot of complexities that makes it less attractive to form a merger. For example, there is the issue of dilution of control. By forming a merger, the firm will reduce the amount of control it has on decision making. It will have to contend with the inclusion body of new investor who will inherit the right to vote on portentous decisions. This may change the goals of a company and work to slow decision making. A merger also reduces the publics confidence in a firm. The public may construe the move as a measure to save the firm from imminent failure.In order to obliterate these complexities, it becomes paramount to seek alternative ways of expanding a business. One of the alternatives is capital expenditures. However, it is not overly advantageous. Complexities of funding expansion using capital expendituresThe cost outlay of financing capital expenditures is particularly high. Therefore, a firm has to do a comprehensive review of the cost and benefits of using the available finances to expand the business. In addition to the cost, capital expenditures require a large investment of time and labor. Given that these resources are limited a firm is constrained by the availability of the factors of production. For a firm that has limited resources will find it extremely difficult to expand via capital expenditures. Convergence of the needs of the stockholders and managersThe need of stockholders is to maximize increase their wealth. On the other hand, the management aims to accomplish management efficiency and increase a businesss competitiveness. The super acid goal of both parties is profitability. A stockholders wealth is increased significantly by profits. On the other hand, a business becomes efficient if uses the least resources to reach the greatest possible profit (Thukaram, 2003).The method of expansion chosen for the firm will be the most efficient and that will maximize the return on investment by the stockholders. To determine the returns from the investment a firm can use scientific ways of measuring the highest possible level of returns. These methods include, evaluating the marginal rate of return for the project.