From the course: Investment Evaluation

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Investments and economic capital

Investments and economic capital - Microsoft Excel Tutorial

From the course: Investment Evaluation

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Investments and economic capital

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- Alright, you get it. Investments can be a good thing. Especially when you get a good return. But how do you know when you're ready to invest? If we're talking about personal finance, then maybe it has to do with how much risk you're willing to take. If you're willing to invest money, you also have to be willing to lose it. It's a gamble. And the future is quite difficult to predict. However, if historical data hold up, then you'll end up ahead if you hold on to the investment long enough regardless of market fluctuation. So how do you know when you're ready to make business investments? Well, if your business is growing at a fast rate and you can't support it with your current infrastructure, you gotta start spending some money. This may include plant, property, and equipment, hiring extra staff, or buying more inventory. But keep in mind that this is all a balancing act. In order to finance these extra purchases, you'll more than likely be taking out loans at a certain percentage…

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