Primary objective of the present study was to examine the relationship between use of capital\ninvestment appraisal practices and effectiveness of investment decision of listed\nmanufacturing companies in Sri Lanka. Capital investment appraisal practices were measured\nby capital investment appraisal techniques and risk analysis techniques of investment projects.\nEffectiveness of investment was measured by perceptions of CFOs on the performance from\ninvestment. Firm size was used as the control variable to examine the relationship between\ninvestment appraisal practices and effectiveness of investment decision. The study employed\na field survey from January to March 2017 and primary data was collected through\nself-administered questionnaires from randomly selected 20 listed manufacturing companies.\nResults of the study revealed that use of NPV and IRR have significantly positively related to\neffectiveness of investment decision while DPB has significantly negatively related to\neffectiveness of investment decision of listed manufacturing companies in Sri Lanka. Risk\nanalysis techniques were not significantly related to effectiveness of investment decision.\nFindings of the study may useful to the investment decision makers in order to achieve the\nshareholders wealth.
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