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Finance - Investment

Theories

In this section, we look in more detail at each of the investment appraisal techniques that are available to a business. If you haven't looked already, it may be worth having brief look at the explanation section to see what the main tools are.

Choose the technique you would like to look at below:

• Payback period - how can we calculate the payback period for an investment?
• Average rate of return - how do we calculate the average rate of return for a project and how reliable is the figure?
• Discounted cash flow - what is meant by the discounted cash flow and why do we need to discount future income anyway?
• Advantages and disadvantages of investment appraisal techniques - what is meant by the discounted cash flow and why do we need to discount future income anyway?

Once you have gone through these you might like to have a look at the case study and practice using the different techniques.