INVESTMENT APPRAISAL ASSIGNMENT - Research Proposal Example

Only on StudentShare

Extract of sample
INVESTMENT APPRAISAL ASSIGNMENT


Project appraisal techniques and methods vary in their importance and significance therefore their use is also dependent upon what are the intended objectives of the finance managers while assessing and evaluating projects. It is also important to note that the basic method which is now being widely accepted as more credible mean of project appraisals is based on the time value of money concepts. Since the project appraisal methods include both the TVM and non- TVM based methods therefore it is up to the finance managers to decide what basic philosophy and method they intend to apply.
Return on Investment is one of the several methods of making project appraisals. The basic philosophy behind this method is the fact that finance managers take the expected gains from the project with comparison to the total investment cost of the project. The basic formula for calculating Return on Investment is:
ROI is preferred method because of its simplicity. It is to calculate and can be handy and a quick mean of having a look at the overall value addition capability of the investment made. The basic criteria to judge the suitability of the project through this method is the fact that if ROI is positive than the proposed project may be undertaken.
It is also important to mention that ROI may not be the most sophisticated ...
Download paper

Summary

For an initial outlay of 300,000 GBP, for 5 years, with a constant cash flow of 35,000, we can compute IRR of the project to arrive at a rate which equates cash flows with the initial outlay and then finding out the net present value of the project to arrive at highest cost of capital…
Author : vullrich

Related Essays

Evaluation of Investment Appraisal Techniques
(Ross et al., 2002). The latter case is in a situation where only one project is being evaluated. In the event were the company is evaluating a number of projects, for which only one will be selected, the decision criteria is to first of all discard all projects with negative net present values and then select the project with the highest net present value among the positive NPV projects. (Ross et al., 2002; Myers and Brealey, 2002)....
12 pages (3012 words) Essay
Strategic Investment Decision Making
This paper addresses a critical question "Should TAM Airlines buy Airplanes of the Model: Fokker F-100 or the Airbus A-320" The research is carried out in the form of a case study where drawing information from different search engines such as Google and previous research we compared the two aircraft....
11 pages (2761 words) Case Study
Post project appraisal of Woody 2000 (project of The Custom Woodworking Company)
Professional project management and control techniques were not used during execution and close-out. The project encountered time and cost overruns, and project cash flows were not financed efficiently....
6 pages (1506 words) Assignment
Capital Investment Appraisal
In applied capital budgeting, however, the fundamental concept of managerial flexibility, or active project management, has been well accepted and long practiced. In the past, one way decision-makers have attempted to supplement a traditional analysis is with "what if" analyses, such as sensitivity analyses, scenario analyses, and simulation. However, richer and more efficient capital budgeting decision-making frameworks are needed; and they should directly translate into increased corporate effectiveness, profitability, and long-term survival in today's globally competitive marketplace....
3 pages (753 words) Essay
Investment Appraisal
Investment Appraisal ...
6 pages (1506 words) Essay
Investment Appraisal ( case study)
“It has long been recognised that the recognition of risk is an important component in capital budgeting decisions. The future is uncertain and investment appraisal techniques that fail to recognise this fact will almost certainly lead to incorrect conclusions and erroneous recommendations.” (Brookfield, 1995)...
10 pages (2510 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!