Investment Appraisal Flashcards
What is Investment Appraisal?
Investment appraisal is a management decision-making technique or tool. It is used when management is proposing to spend money on fixed assets - this is regarded as capital expenditure.
It is sometimes referred to as project appraisal.
What are the relationships between competing projects?
- Mutually exclusive projects
- Independent projects
- Dependent projects
What is Mutually exclusive project?
The decision to adopt one of two or more competing options cancels out the other projects.
What is Independent Project?
From a given range of alternatives the decision-maker may choose any single project, a combination of project or all of the projects. All projects are independent of each other.
What is Dependent Project?
With dependent project, the choice of one project may mean changes or alternations to other aspects of the business.
