investment appraisals Flashcards
1
Q
Payback advantages
A
Easy to calculate and understand, focusses on cashflow which is important for business finances, relevant for hi-tech and rapidly changing industries, easy to compare two projects
2
Q
Disadvantages of payback
A
Doesn’t take into account inflation, encourages short term thinking, doesn’t include qualitative aspects of the decision, ignores cashflows after payback is reached
3
Q
what are qualitative factors firms should take into account when considering investment appraisal
A
the aims of the organisation, reliability of data, the risk involved, production requirements- compatible machinery, personnel- will it suit staff, the economy, brand image, is there subjective criteria.
