The Importance of Financial Evaluation in an investment decision making

Abstract

Investment is a primordial factor for the increase of the benefit of the company in particular and the economy in general. To invest is undoubtedly the most important decision a company can make and on which position and continuity in the market depend. Hence, it is a complex financial decision because investment requires adequate financial funding, including a substantial freeze on financial resources. The aim of business is growth which can be reached only through investment requiring important financial resources, that is why corporate finance is all about value creation and wealth maximization. In this context, investments should be subject to careful analysis of their variables such as the interest rate because these variables are among the elements involved in the financial decisions. With regard to its importance and the consequences that can result from a bad investment, many tools have been established to help in decision-making process and that lead to a careful selection of the most appropriate investment In this context, the financial evaluation of a project is considered as an important phase allowing the decision maker to have a rational vision on its profitability and also acquire a commitment to achieve it.