7.9d - Making Investment Decisions (Qualitative Factors and Making Decisions) Flashcards
1
Q
What qualitative factors need to be considered when making investment decisions?
A
- Impact on employees
- Product quality and customer service
- Brand image
2
Q
How can a business check if an investment appraisal is worthwhile?
A
- Length of project (long project means unrealistic predictions)
- Size of investment
- Experience of management team
- Economic and market environment
3
Q
Why are investments always uncertain?
A
- Appraisal methods are based on predictions
- Market environments are uncertain
- Change in circumstances that businesses based their predictions on makes them invalid
- Every firm has a different attitude to risk
4
Q
What does sensitivity analysis do?
A
Looks at the assumptions in investment appraisals and considers what would happen if they were altered
