Here is where Investment Appraisal emerges as a critical tool, equipping businesses with a framework to analyze potential investments.
Posts tagged as “Investment Appraisal”
Net Present Value (NPV) shows the numerical cash value return from the investment project with taking discounting into consideration.
Average Rate of Return (ARR) gives the annual Net Cash Flows (or net profits) from a project as a percentage of the initial cost of the investment.
Payback Period (PBP) gives the length of time required for Net Cash Flows (or net profits) to pay back the initial capital cost of the investment.
Appraising investments is a part of the Capital Budgeting Cycle. Investment Appraisal helps to determine the best investment for a business.
No professional business manager can afford to ignore other qualitative factors of Investment Appraisal in addition to quantitative factors.
Investment Appraisal assesses attractiveness of different capital projects. Projects usually involve a high expenditure and cannot be reversed.
All business organizations need accounting systems. This makes finance one of four core business functions.
Internal Rate of Return (IRR) of An Investment
BUSINESS MANAGEMENT, FINANCE and INVESTMENT APPRAISAL
Internal Rate of Return (IRR) shows the actual percentage rate of return from the investment considering discounting.