A number of factors influence the investment decision of a firm:

Risks and Uncertainties:- High risks and uncertainty in a particular investment field will discourage the firm from investing there and vice versa

Economic climate :- A period of economic propriety will encourage the firm to invest while a recession or economic slump negatively influences the firm's decision to invest.

Cost of factor inputs :- low cost of raw materials, labour, capital etc attract firms to invest and vice versa.

Political climate:- A politically stable atmosphere induces investment by firms yet political instability and insecurity make firms to shy away from investment.

Profitability:- High profitability in an investable area stimulates investment by firms and low profitability discourages firms from investment.

Level of competition:- If competition in a particular field is low a firm any take a decision to invest in it and the other way round.

Government policy:- This too influences the firm's decision to invest through attracting or discouraging investment in certain fields.

Opportunity cost:- If the capital to be used in a given investment venture bears a lower opportunity cost, the firm will be induced to invest and vice versa.

The period it takes to recover the capital invested by the firm. If it takes a short period for the firm to recover the initial cost of capital invested, the firm is easily induced to invest.

The firm's capital reserve:- If the firm has a huge capital reserve, it is easy for it to decide to invest than if the firm has a meagre capital stock.