Investment appraisal

Investment appraisal assumes....

• Costs change

• Costs stay equal

  EC Inds dont change

• Costs stay equal

  EC Inds change

• The market stays stable

Payback measures....

• The amount of profit earnt

• How quickly an investment can be repaid?

• How inflation impacts an investment

• whether a business should go ahead

ARR is calculated by...

• ARR = Profit / Inv cost

• ARR = Profit / Inv cost x 100

• ARR = Avg ann profit /inv

• ARR = Avg ann profit / inv cost x 100

Net present value is a better technique as...

• It considers interest rates

• It assumes all economic variables change

• It factors in the effects of inflation

• It shows how ER impact an investment

Examples of qualitative factors that are considered in an investment decision are...

• ARR, Payback, NPV

• Objectives, ethics and impact on staff

• Market research

• Profitability