Making capital investment decisions

1
Making capital investment decisions
2
Exhibit 10.1
3
Methods of investment appraisal
4
Accounting rate of return (ARR)
5
Payback period (PP)
6
The cumulative cash flows of each project in
Activity 10.6
7
The factors influencing the discount rate to be
applied to a project
8
Present value of 1 receivable at various times
in the future, assuming an annual financing cost
of 20 per cent
1
Years into the future
9
Why NPV is superior to ARR and PP
10
Internal rate of return (IRR)
11
The relationship between the NPV and IRR methods
12
Dealing with questions relating to investment
appraisal
13
Investment appraisal in practice