Module 3 - Capital Investment Appraisal Flashcards
(6 cards)
1
Q
What is Positive Purpose Expenditure:
A
Research
Licence fees
Expansion of factory
2
Q
What Is Negative Purpose Expenditure?
A
Redundancy
Mothballing
3
Q
What are the three relationships between projects?
A
- Mutually Exclusive
- Independent
- Dependent or Contingent
4
Q
If you are comparing projects with two separate initial investment amounts what capital investment appraisal technique should be used?
A
NPV
5
Q
What would make ranking between IRR and ARR different?
A
- Different cash flow patterns
2. Different life expectancies
6
Q
What is NPV synergy?
A
When two projects together exceed NPV + NPV
