7 terms

Finance - 2 Investment Appraisal

Accounting rate of return
calculates average annual profit of investment project
Discounted cash flow
Reduces value of money that business receives in future years
Investment appraisal
Helps managers choose projects based on quantitative techniques
Net present value
total discounted cash flows, minus initial cost of investment project
Payback period
Estimates length of time to recoup initial cash outflow of investment project
Qualitative investment appraisal
Judge whether investment project is worthwhile through non-numerical means
Quantitative investment
Judging whether project is worthwhile through numerical means