investment appraisal Flashcards
1
Q
what does investment appraisal help with
A
helps businesses decide what projects to invest in, so they get least risky return for their money
2
Q
risks and return relaitonship
A
business wants the risk to be low and the return to be high
3
Q
what are the 3 methods business can use to help them decide whether investment is a good idea
A
calauting pay back period
avergae rate of return
discounted cash flow forecasts
4
Q
dis of investment appraisals
A
methods use predictions about how much money the projects will make in the future so there is risk of incorrect predictions
5
Q
what is the payback period
A
time it takes for a project to make enough money to pay back its initial investment
6
Q
packback period calculation
A
amount invested divided by the annual net cash flow
