Authors: 1Dr. Apea-Bah Cyril Swithin, PhD. | 2Prof. Allan Kwasi Asante-Yeboah, PhD.
1,2School of Finance & Financial Management
Business University of Costa Rica
The concept, capital budgeting is been assessed with risk, uncertainty and certainty models of public sector organizations in Ghana (the sector). Capital budgeting is ‘substantial financial investment in long-lived assets’ Fabozzi and Peterson (2003, p.358), whiles concept assessed with, ‘certainty implies perfect information, risk implies partial information, and uncertainty implies incomplete information’ Taha (1987, p.428). The literature review is ascertained from the foundation, development, different theories and historical thinking from the era before ancient Babylonia to present. Three articles are reviewed, critiqued, and appropriate opinions suggested with models like the Sensitivity Analysis and Simulation Analysis for computing accurate NPV results, where higher margins of risk noted for corresponding higher returns. The sector, from capital budgeting, determined, should consider the profitability mindedness. The assessment of risks, uncertainty and certainty indicators is determined as the markup from the emerging concept derived. The chi-square test of statistics is computed, and the hypothesis derived shows the failure in rejecting the null hypothesis, that the, ‘expected value’ of the sector do not suffer threat. Since, it is not significant at the alpha of 0.05, which is the conventionally accepted significance level of the probability, p > 0.05 of 1.24. Some of the recommendations from the result are; equipping the human capital with financial management know-how, using the required risks and uncertainties functions and risk-adjusted models to calculate for capital projects’ results, and resourcing with standard financial policy, and procedure manuals.
Keywords: Capital Budgeting, Capital Risk, Substantial Financial Investment, Public Sector Financing