2934582
Description
Mind Map by beccehjane, updated more than 1 year ago
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Created by beccehjane
over 11 years ago
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Investment
Apprasial
- helps simplify
choices/make decisions
- Simple Payback
- time in which initial investment
is expected to be recovered
- investment £100,000, expected to generate
£25,00 a year, payback £100k/£25k = 4 years
- L3: helps companies establish
when money can be paid back by
- L4: however doesn't consider
change in £ over years
- time in which initial investment
is expected to be recovered
- Average Rate
of Return
- looks at predicted average
yearly return on investment
- average yearly profit /
initial investment x100
- Average yearly profit:
total profit/no. years
- Average yearly profit:
total profit/no. years
- L3: looks at whole
long term profitability
- L4: takes no account of
time value of money
- looks at predicted average
yearly return on investment
- Net Present
Value
- takes into account when
cash inflows are recieved
- net cash flow x discount
factor (do this for every year)
- add all together then minus initial investment
- add all together then minus initial investment
- L3: focuses on importance of
cash inflows early in project
- L4: difficult in changing Uk
economy, to predict rates
- takes into account when
cash inflows are recieved
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