Long Term Investment Decisions Essay

Long condition majuscule determinations involve choosing how to finance long term estimates. For a movie rental company, much(prenominal) decisions would include start new shops in new markets or purchase new machinery that would cleanse the self-coloureds technology. sooner making such decisions, a firm has to do an analysis of the returns that the new project would bring against the approach outlay of the project. in that respect argon several slipway of doing such an analysis. They include the payback period, net ease up value, internal number of return among opposites. The of import subscribe to of conducting this analysis is to determine whether the expected returns meet a certain predetermined benchmark, usu ally higher than the take a chance free return. Rationale for administration interventionThe get together States governing body intervenes in business processes in a phone number of shipway it has ground levelulated linguistic rule that governs th e have distribution industry to get a line a aim pick out field, ensuring employee shield, protection of the environs etcetera. For instance, there be laws that govern advertising. These laws ar set to ensure that advertisers argon truthful and honest in their adverts. To protect the in force(p)s of employees, the political relation regulates issues such as the minimum wage account payable to an employee, the maximum running(a) hours and a good working environment.In addition, the governing has put rhythms that regulate burn out vigilance and protection of the environment. Through the environmental protection agency, the government ensures businesses comply with environment protection regulation in fellowship to protect the environment (Graham et al, 2010). wherefore Government Regulation is neededGovernments in all countries in the world regulate business for twain economic and societal reasons. In the recent past tense governments have continually regulated businesses for economic reasons roughlyly to prevent falling productivity especially in developed economies. Social regulation is practiced in order to ensure businesses comply with the social or the moral expectation of the public. For instance in a movie rental company, the government would engage regulations that conquer 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 organise is to protect the rights of its citizens. There atomic number 18 a number of rights that if non protect whitethorn lead to social unrest. A government should ensure that seemlyty rights are enforced to ensure that the producers leap from their hard labor. In addition, the government should ensure the kind of media that is on sales event is age appropriate. It should protect kids from content that may not be appropriate to them. For example, small kids should not be allowed to access pornography or content that is exceedingly violent.Another reason why a government should regulate businesses is to ensure a level playing ground for all firms. Because of the disparities in some resources a firm may possess an unfair vantage 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 needs to be regulated. For instance, in the movie industry, the government may contend in to break cartels that form in order to influence the prices of production and the distribution channels. Specifically, a government can put in place regulations that modify the market and break such cartels.In addition, the government has a moral obligation to protect the environment by ensuring that hazardous material is properly disposed. In a movie rental company, there are a lot of technological wastes generated. Lack of proper disposal of pcs and other such like materials that cause cancer to huma ns may lead to add-on in incidents of cancer. Therefore, the government must(prenominal) come up with measures that ensure that there are proper disposal mechanisms for such waste. The benefits of a unifyrThere are a lot of advantages that megahit would enjoy as a head of forming a merger. One of the greatest advantages of forming a major is that smash hit would enjoy the economies of surpass as a ending of operating as a larger company. Economies of surmount occur as a result of reduction of average embodys as a result of increased output. In addition, the merger can second blockbuster action diversification. For example, blockbuster can merge with firms that provide a different service from what it offers. By doing so, block buster provide obtain access to knowledge and expertise that may help the firm gain competitive advantage.However, the advantages of forming a merger matter on a number of factors. Specifically, the success of a merger depend on the scope of econ omies scale created, effects on monopoly power, and the effects on cost. However, collectible to the threats, blockbuster chooses to pursue its elaborateness plan by detonator investment. Capital projects are long term investments that are made to build on, or improve a crown intensive project. A project that is smashing intensive requires the input of considerable amounts of capital especially financial and labor to start and run. They alike require a lot of planning and resources. There are a number of ways that a firm can finance capital projects. originally determining 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 dominance. 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 of new investor who will inherit the right to vote on significant 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 eliminate these complexities, it becomes paramount to seek alternative ways of blasting a business. One of the alternatives is capital expenditures. However, it is not also 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 suss out of the cost and benefits of using the available funds to expand the business. In addition to the cost, capital expenditures require a huge investment of time and labor. Given that these resources are limited a firm is constrained by the availabilit y 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 achieve management efficiency and increase a businesss competitiveness. The common 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 achieve 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.