3.8 Investment Appraisal Flashcards
1
Q
Investment Appraisal
A
Quantitative techniques to assess the profitability or desirability of a project
2
Q
Payback Period (PP)
A
Length of time for net cash inflows to be larger than the original investment
When the accumulated Cash Flow goes from negative to positive
3
Q
Average Rate of Return (%) (ARR)
A
Measures the Annual profitability of a project as a percentage of the initial capital cost
4
Q
AO3, Discuss whether Company XX should take option A or B based on ARR and PP
A
5
Q
Net present value (NPV)
A
= sum of all Discounted Cash flow
