An investigation into capital budgeting decisions: a case of Wadoma Royale Hotel in Ashanti Region

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Capital investment decisions are expected to have significant impact on the future well being of a firm in term of its profitability and survival. This is because it involves long term commitment of firm's scarce funds often in the face of considerable uncertainty. There have been concerns among many (investors, shareholders, management as well as financial analysts) why a number of projects turned out to be unproductive at the end of the day. Is it because of non existence of systematic procedures and rules for generation and appraising the investment projects? This was what the research attempted to investigate. Generally, the approach adopted for this study was a case study research in which attempt was made to assess the respondent's capital budgeting procedures and rules for generating and ranking investment proposals and to find out whether or not post implementation audit or review is done after the project takeoff This was done using self administered questionnaire coupled with personal and telephone interviews with regular visits to the respondent's premise. In consonance with theoretical bases respondent's (Wadoma Royale Hotel, Abuakwa) practice does not differ significantly. However, it was found out that Wadoma Royale Hotel, Abuakwa do not include risk and uncertainty in its capital budgeting decisions. This is highly disastrous and might have catastrophic effects on the outcomes of the capital budgeting decisions arrived at. This is possible area of further research and study in the near future.
A long essay submitted to KNUST- School of Business, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Master of Business Administration, 2008