investment apprasial

Question 1

what are the 3 investment appraisals

Answer 1

payback
average rate of return
net present value

Question 2

what is payback

Answer 2

measures the time period required for the earnings of an investment to recoup the costs

Question 3

what is average rate of return

Answer 3

calculates the annual percentage rate of return on each possible investment

Question 4

what is investment appreasial

Answer 4

techniques designed to help a business judge the deserability of investnig in particular projects

Question 5

Benefits of using payback

Answer 5

Cheap and easy to calculate

Question 6

Negatives of using payback

Answer 6

Susceptible to short termism as you will pick the project that has the fastest results and may be a detriment in the long run / doesn’t care what happeneds after the payback

Question 7

Calculate arr

Answer 7

Average annual return / investment

Question 8

What’s npv

Answer 8

Calculates the monetary value now of a projects future cash flow