Benefits and Limitations of Investment Appraisal Techniques

Financial Analysis Management
& Enterprise

Table of Contents
TASK 1............................................................................................................................................3
Critically evaluating several benefits and limitations attached with investment appraisal
techniques ...................................................................................................................................3
TASK 2............................................................................................................................................8
Highlighting different funding sources ......................................................................................8
REFERENCES .............................................................................................................................13

TASK 1
Critically evaluating several benefits and limitations attached with investment appraisal
techniques
a. Payback Period
Interpretation- From the above table it is analysed that shorter the payback period, less
time the project will take to recover an initial outlay and vice versa. As the value of small
development projects is less in comparison to other proposals, it indicates that this development
would recover an initial cost in 3.33 years.
b. Net present value
Payback period (in years)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
3.33
4
4.44
Small
Medium
Large

Interpretation- The above analysis reflects that all the three projects are generating
positive value of NPV which that all the projects are viable and desirable.
c. Internal Rate of Return
NPV (£m)
0
1
2
3
4
5
6
7
8
4
6
7.5
Small
Medium
Large