Investment appraisal Definitions Flashcards
1
Q
Investment appraisal
A
a process of quantitative and qualitative evaluation of an investment decision
2
Q
Payback period
A
a calculation of the length of time that it takes for a capital investment to pay for itself
3
Q
Average rate of return
A
an investment appraisal technique that expresses the annual forecast returns as a percentage of the initial capital cost
4
Q
Net present value
A
a method of making investment appraisals more accurate by using a discount rate to adjust the value of future returns
5
Q
Discount rate
A
the rate of return that a business could earn on another comparable investment(applied to the expected future cash flows from an investment to reduce them to today’s value of that future cash flow)
