Investment Appraisal Metrics and Machine Selection for Financial Feasibility

Accountancy

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Examination of investment appraisal metrics, as well as recommendations for machine
selection..................................................................................................................................3
2. Causes and explanations for the Director of Finance's claim that perhaps the IRR is greater
than 7%...................................................................................................................................4
Calculation of Net Present Value and Payback Period for a business...................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Various methodologies are used in financial management to assess the project's economic
feasibility for the commercial enterprise. These strategies assist the corporation in determining
which project is useful to them, providing the entity with a bundle of velocity and resilience to
offer them a competitive advantage over their competitors (Burton and Bryan, 2019). These
strategies have been highlighted in this section, as well as their impact on the machine. That
outcome provides insight into the machine selection process, as well as appropriate
recommendations for the same.
MAIN BODY
1. Examination of investment appraisal metrics, as well as recommendations for machine
selection.
The investment appraisal techniques consist of various methods such NPV, ARR, IRR,
payback which are too considered for examining and giving the suggestions. By employing these
strategies in a methodical manner, they will have a knowledge to the company's operation on
project selection. These procedures are not only compliant with the requirements, but they are
also practical to apply to the data given. The best approach among them is NPV, which takes into
account the time value of cash and provides an accurate result for project selection.
 Payback Period: The starting time consumed by the intended project has been computed
using this method, giving an estimate of how long it will take to repay the project cost.
 Accounting Rate of Return: This strategy emphasises the organization's return on
investment for a specific project. The yield is calculated by means in order to come at
ARR on relative basis.
 Internal Rate of Return: A rate at which the expected profit equals the estimated cash
outflows is calculated using this method. The NPV will indeed be zero at this rate.
 NPV: It considers the time value of money, this strategy is widespread and among the
best.
 Discounted Payback: This is identical to payback time, with the exception that
discounted cash flows were used instead of future revenues to offer a more precise
conclusion (Babich and Birge, 2020).