Case report for Harvard Business School Case and solutions to problems Essay

Case report for Harvard Business School Case and solutions to problems in the case - Essay Example At times, there are different other factors apart from these budgeting methods, which should also be kept in mind while making decision. Because when we talk about investment there are two major components; return and risk. The budgeting method used in the cases will help the decision maker in critically analyzing all the available alternatives and choosing the best among them, so that they can achieve profitable cash flows in future. Investment is defined as present commitment of dollar for a specific tenure in order to generate future stream of cash flows which will be greater than current dollar amount1. The investor can be an individual, an organization, a government or a pension fund. In addition to this, investor expects a rate of return on the investment as compensation for the time for which they have made investment2. However, there might be some deviation from expected rate of return from certain investments and such deviation is known as investment risk. Therefore, where there is investment there is return and risk. Investment can be of two types; financial investment and economic investment. A financial investment refers to commitments in terms of monetary terms in order to generate better future cash flows which can be in a form of interest, premium, dividend etc. However, economic investment refers to making fund commitment which will result in increase of capital stock which includes goods and services. Furthermore, investors are looking for investment opportunities that will increase the current pool of funds in future. Hence, investment analysis refers to finding and opting for investment opportunity that will be giving highest rate of return and is having minimum risk. Thus, investors needs to evaluate all the available investment options and should come up with the best possible scenario3. Organizations encounter many investment opportunities but the main issue is opting and evaluating the options. Therefore,