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Explain two (2) non-financial factors a company needs to consider before deciding to approve an investment...

Explain two (2) non-financial factors a company needs to consider before deciding to approve an investment with positive Net Present Value (NPV)?

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Answer #1

Hello Buddy,

Coming to your question, two factors which a company needs to consider before deciding to approve an investment with positive Net Present Value, would be as follows -

1) Operational Considerations - Such as ease in availability of raw materials, skilled/unskilled labor, etc.

2) Exchange Rates (if the investment is being made in a foreign currency or the business is engaged in export or import) - The company will have to maintain proper hedges in place to ensure that the risk of such fluctuations in foreign exchange does not hamper its operations.

I hope the above solution is what you were looking for. For any further queries or doubts in the solution, please feel free to drop a comment. Please do leave a positive feedback, Thank you :)

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