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Investment appraisal techniques with assumptions, limitations and applicability

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Added on  2019-12-04

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Investment appraisal technique it determines that spend of investment which provide return in highly (Allen and Economy, 2011).Right decision at right time take Benefit as well as leadership team work as accordingly while poor decision take does not effective and company suffer loss. Internal rate of return Type of resources Equity investment Human resources Interest on investment Organisation profitably Hence, this present study contain, decision making of the managerial person in selecting the capital appraisal technique which gives the better knowledge that any of the particular project gives the maximum benefit to

Investment appraisal techniques with assumptions, limitations and applicability

   Added on 2019-12-04

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Investment appraisal techniques with assumptions, limitations and applicability_1
TABLE OF CONTENTSINTRODUCTION ..........................................................................................................................32. Explain investment appraisal techniques with assumptions, limitations, context andapplicability.................................................................................................................................4Risk management techniques in capital appraisal.......................................................................7CONCLUSION ...............................................................................................................................8REFERENCES................................................................................................................................92
Investment appraisal techniques with assumptions, limitations and applicability_2
INTRODUCTION Investment appraisal techniques is mathematical method which management use todetermine the benefit for future. There is managerial person use this method for betterforecasting in future time-period. It assumption based techniques which provided possible helpsto managerial or investor for taking best decision which provided maximum profit to company.In this present report consist of various type of appraisal techniques which used by investor forfor purpose of earn maximum benefit (Allen and Economy, 2011). In other hands it consist ofexample in table formate which is analysis by applied appraisal technique. For purpose of takingbetter decision for maximum profit in future time period. Investment appraisal technique itdetermines that spend of investment which provide return in highly (Allen and Economy, 2011).Right decision at right time take Benefit as well as leadership team work as accordingly whilepoor decision take does not effective and company suffer loss. In this report contain the varioustechniques which helpful in right step by the management. Appraisal technique also known asthe capital budgeting is primarily planning process which facilitated to manage investmenteither short term or long term. It is the techniques to use better use of their various expenditurethus such saving from the right management called the saving for enterprise (Bennouna,Meredith and Marchant, 2010). It is also mange by inter firm and intra firm comparison thus ithelps to manges and serves investment as according to requirement.Type of the business techniques 1.Real option analysis2.Accounting rate of return 3.Adjusted present value 4.Profitability index 5.Equivalent equity 6.Pay back period 7.Discounted pay back period8.Modified internal rate of return (Bennouna, Meredith and Marchant, 2010). 9.Internal rate of returnType of resources 1.Equity investment 3
Investment appraisal techniques with assumptions, limitations and applicability_3
2.Human resources3.Interest on investment 4.Organisation profitably Hence, this present study contain, decision making of the managerial person in selectingthe capital appraisal technique which gives the better knowledge that any of the particular projectgives the maximum benefit to company.Explain investment appraisal techniques with assumptions, limitations, context and applicability.1.Net present value – This type of technique focus on cash inflow and outflow thus it hassingle objective (Bennouna, Meredith and Marchant, 2010). It the mathematicallyevaluation of the cash at the present time value because value of the cash vary by theinflation and deflation rate thus it measures their actual value therefore, company knowtheir position.Advantages – ◦Cash in company vary their value at the time to time because of inflation rate thustoday cash power not same as past cash value thus it.◦Value of time is considered◦Powerful techniques use in the all aspect of the law (Brotman, 2010).◦This technique is base on the cash flow◦Fix discounted rate analysis of whole value.Disadvantages – ◦It shows the quantitative data which not be accurate and not applicable on all type ofpurchase.◦Difficult to identified the discount rate in respect to present value.YearProposal 1Proposal 20£280,000.00£280,000.001£75,000£86,0002£80,000£85,0003£68,000£71,0004£55,000£54,000Total£278,000£296,000.00NPV4
Investment appraisal techniques with assumptions, limitations and applicability_4

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