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Investment Appraisal - Mind Map
Mind Maps have been produced to introduce topics and give students an overview of key topics being studied. The maps can be viewed as a whole page or, for those who prefer a more linear approach, as a text version.
View larger version of the mind map.
- Cash Flows
- Income Streams
- Yields from Investment
- Time Value of Money
- Profitability versus risk
- Payback Period
- Simple to use
- Useful for short term decision making
- Useful if the returns are accurate
- Income streams not time related
- Accounting Rate of Return
- Shows profitability
- Allows comparison between projects
- Income streams not time related
- Internal Rate of Return (IRR)
- Where NPV = Zero
- Time value related
- Enables comparison to made of projects of differing value
- Profitability Index
- NPV/Initial Capital Cost
- Allows comparison of different projects
- Net Present Value (NPV)
- Takes account of changing value of money over time
- Enables comparisons at different interest rates to be considered
- Useful for comparing similar projects with same cost
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