5. Case Study(Purchase evaluation equipment or software)

5. Purchase equipment or some hardware and software needed in a certain company are good, but we have also to consider that every investment should be use in the company not on our personal interest, because there are some employees especially in high rank, they made a decision for there own good or satisfaction on there self. And People are liable to be attracted to risk. They buy international stocks. And they buy tech stocks - the riskiest of all (and about three times as risky as stocks in general). I don't know if people haven't seen a table like this before, or if they just don't want good-but-boring investments like timber or decent corporate bonds, for example. But when you take the time to compare the risk-reward ratios of different investments - in much the same way you would compare features of new luxury cars before purchasing - you give yourself a much clearer understanding of what to expect for your money. As we proved here, it's easy to find out just how much return you can expect…and just how many sleepless nights you'll have along the way. One more important thing to note: we only used 18 years worth of data in this chart, and that's probably not enough. If you just invested based on this table, you'd buy big U.S. stocks right now and shun small stocks, which could be a dangerous move. The table and the comparisons are only as good as the data used. And he investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.

A business might invest with the goal of making profit. These are marketable securities or passive investment. It might also invest with the goal of controlling or influencing the operation of the second company, the invested. These are called inter corporate, long-term and strategic investments. Therefore, a company can have none, some or total control over the investor’s strategic, operating, investing and financing decisions. One can control a company by owning over 50% ownership, or have the ability to elect a majority of the Board of Directors.” What Reward to Risk Ratio is Right for you? “The key message here is that, when you evaluate any investment, you've got to consider both expected RETURN and RISK. Most people, dreaming about big potential returns, forget about the second variable - RISK. Don't include yourself in that list. Before making an investment, ask yourself: "How much risk am I really taking, and what is my upside?" For me, personally, I like to have a three-to-one reward-to-risk ratio. If I can't potentially make three times whatever I have at risk in a stock, it's not worth it.