7.8 investment appraisal Flashcards
1
Q
How do you workout payback?
A
Work out the balance
stop when the balance is less than net return the following year
calculate number of months:
balance / net return for following year x 12
2
Q
How do you workout average rate of return?
A
work out overall profit
calculate profit per year
Calculate profit for the year as a % of overall profit:
Average profit per year / initial investment x 100
3
Q
How do you workout net present value?
A
add up all net present values
minus cost of investment
