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investment appraisal - Coggle Diagram
investment appraisal
investment opportunities
Investment : expenditure by a business on buying another business or non-current assets with the aim of creating a future stream of revenue.
Risk : the chance of a misfortune occurring, possibly resulting in financial loss
investment appraisal: a series of techniques designed to assist businesses in judging the desirability of investing in projects
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Payback period
a simple technique that measures the time period required for the earnings from an investment to recoup its original cost. It finds out the number of years it takes to recover the cost of an investment from its earnings.
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the disadvantages are ignores the level of profits that may be ultimately generated by the investment
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average rate of return
more complex method of investment appraisal. this technique calculates the percentage rate of return on each possible investment.
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