Solved: Students are expected to cover THREE of the following: Payback analysis: this assesses the time period

Students are expected to cover THREE of the following: Payback analysis: this assesses the time period that is required to pay back’ the initial investment. The method works by evaluating the inflows of funds, such as me increased profits that can be achieved from the investment and netting these inflows against the expenditures made. The effect of using me payback criterion is that it gives preference to projects which pay back quickly, even if other projects offer better returns in the long term. The average rate of return: This is another relatively simple method to evaluate investment decisions and calculates the average rate of return earned by the money invested. The drawback of the ARR method is that it takes no account of the timing of cash flows. Later cash flows are more speculative than earlier ones, but all are given equal weight in the ARR calculation. Net present value: In this method, the estimated net cash flows for each year are estimated and the appropriate discount factor is applied to calculate the present values of all cash flows over the life of the projects. By to telling these, it is possible to arrive at the net present value (NPV) of the project. A positive NPV will mean that the project will earn a higher level of Interest or return than the chosen discount rate. Internal rate of return: The discount rate at which a zero NPV occurs is called the internal rate of return (IRR) of a project. Effectively, this rate can be used as a way of deciding for or against an investment project. Under this method, the higher a project’s internal rate of return, the more desirable It is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. Higher marks will be awarded to students that provide comprehensive answers that assess the three methods of investment appraisal sough, by the question. UP to 8 marks for an assessment of each form of investment appraisal and demonstrating an understanding of the role and importance of investment appraisal in the context of building a new Electrical Engineering facility.

Expert Answer

Payback analysis is the time in which we get our actual investment back after investing in a project. We have to calculate the total investment we put and compare it with the sales we got and the extra amount we got other than our investment which is profit. This method helps us to invest wisely in projects where we get our money back quickly which is very profitable.The average rate of return is the method of calculating the average amount which is set to return from our investment. But the major drawback of this method is it does not take time taken into consideration. Net present value helps to determine the amount currently available , so that we could set the discount rates which further leads us to earn more interest than a chosen discount rate. The amount at which this discount rate becomes zero is called Internal rate of return. This is the key point which helps us to decide whether to invest in a project or not. The more the IRR , the best is the project.

Order NOW for a 10% Discount
Pages (550 words)
Approximate price: -

Why Us?

Top Quality and Well-Researched Papers

All ourbpapers are written from scratch. In fact, Clients who ask for paraphrasing services are highly discouraged. We have writers ready to craft any paper from scratch and deliver quality ahead of time.

Professional and Experienced Academic Writers

Our writers keeps you posted on your papers progress - providing you with paper outline/draft. You are also at liberty to communicate directly with your writer.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time, in many cases quite ahead of time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

× Contact Live Agents