3.3.2 Investement Appraisal Flashcards
1
Q
Investment appraisal
A
Series of techniques designed to assist businesses in judging the desirability of investing in particular projects
2
Q
Financial methods
A
Payback method - calculates length of time it takes for an investment to recoup its original cost
Average rate of return - calculate the annual average return over the life of an investment in order to compare investment with other alternatives
Net present value - can be used alongside other techniques + considers future value of investment
3
Q
Simple payback
A
Quick + simple investment appraisal tool
Simply focuses on time taken to recoup initial investment + considers cash inflows over number of years
Initial outflows / net cash flow per period x12
