1. Accounting and Finance Flashcards
Term 5 Mr Slattery Finance
1
Q
What is the purpose of an investment appraisal technique?
A
They allow a business to analyse the potential reward on various investments and make comparisons in order to select the one that is most worthwhile.
2
Q
Name the 3 types of investment appraisal
A
- Payback
- Average rate of return
- Net present value
3
Q
What does payback work out?
A
It works out how long it takes for an investment to generate enough revenue for it to pay for itself.
4
Q
Payback formula =
A
Initial investment / Cash inflows
