7.9d Making Investment Decisions - Qualitative Factors and Making Decisions

Question 1

What are qualitative factors based on?

Answer 1

The thoughts and opinions of the business’ stakeholders

Question 2

Qualitative factors to consider:

Answer 2

• The impact on employees
• Responsibilities to society
• Product quality and customer service

Question 3

Ways to check if investment appraisal is worthwhile:

Answer 3

• Length of project
• Size of the investment
• Economic and market environment

Question 4

Reasons investments are always uncertain:

Answer 4

• Appraisal methods based on predictions
• Market environments uncertain
• Chances in circumstances that business based their predictions on makes them invalid
• Every firm has a different attitude to risk

Question 5

What does sensitivity analysis look at?

Answer 5

Assumptions and considers what would happen if you altered them