What do surveys tell us about the method of investment appraisal used by business ?

Expert Solution

Investment appraisal is important because it helps to achieve the long term goals of shareholders wealth maximisation and achieve long term business goals.

The methods of Investment Appraisal used by business is :

Payback method
NPV method/ Discounted cash flow method.

Payback method : this method calculates the time period it will require for a project to recover it's initial investment. The payback period is the time it takes for net cash inflow to equal the cash investment. The longer the payback period, is bad for the project. If the payback period> , then the cut off pay back period, then the project is rejected.

NPV method: this is a discounted cash flow method. It compares the initial investment with the present value of the expected cash flows in the future. If the NPV> 0, the project is accepted, else it is rejected.

The survey finds that companies are using more methods together, that usage of the more sophisticated discounted cash flow techniques is higher, and that usage of the less theoretically sound accounting rate of return technique is lower.

jeff jeffy answered 1 year ago

what do granulation and supergranulation tell us about the sun

What do visual illusions tell us about sensory processing?

Discuss data collection methods used in the world around us. Tell us what method (random sample...

Discuss data collection methods used in the world around us. Tell us what method (random sample , convenience , stratified,cluster)is used.Discuss the motivation of the organization collecting the data for utlzing the method . Any positives or negatives to such a technique .

Which of the following statements about the payback period method of investment appraisal is true? The...

Which of the following statements about the payback period method of investment appraisal is true? The method A Does not consider all of the net cash flows for an investment B Considers the time value of money C Depends on the cost of capital of the company D Is a measure of an investment’s profitability

What do illusions tell us about sensory processing? What is the role of proprioception in control...

What do illusions tell us about sensory processing? What is the role of proprioception in control of the body?

enterprenuership in actions...tell us about us.

what do you think about this article? Tell us the one fact in this article you...

what do you think about this article? Tell us the one fact in this article you found most surprising and what types of healthcare entities were directly impacted by this fact. Be sure to include HOW the health care entity was impacted by your chosen fact. If you were the manager of the type of organization that you mentioned in Part 1, based on this article should you have prepared your budget as a static budget or a flexible budget?...

ELISA and Western Blots tell us a lot about infections. What does western blot do that...

ELISA and Western Blots tell us a lot about infections. What does western blot do that ELISA cannot? What does an ELISA do easier than a western blot? Hint: Think about how the assay is done. How is it set up? What data does it give you?

Mutual Fund metrics like Alpha, beta and standard deviation. What do they tell us about the...

Mutual Fund metrics like Alpha, beta and standard deviation. What do they tell us about the fund. ? Pick few funds or any funds you may be familiar with and discuss the metrics and implications

please tell us about your relationship with media. For example, what forms of media do you...

please tell us about your relationship with media. For example, what forms of media do you use for news, entertainment, research, or other information? Do you use social media? What forms of social media and why? What is your personal view on media, is it a necessary and useful tool for society or a distraction from life via social media and advertising, or a bit of both?

Question