Capital Investment Decision Methods for evaluating projects Payback ARR
Capital investment decision methods for evaluating
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Capital Investment DecisionMethods for evaluating projects• Payback•ARR, Accounting Rate of Return (Return on Capital Employed) (ROCE)•IRR. Internal rate of return is the discount rate that will give a Net Present Value of 0.•NPV is the Net Present Value of a stream of cash flows discounted at the correct cost of capital for the degree of risk inherent in realising those cash flows•NPV is best but what do companies use and why?
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2039Capital Investment DecisionMethods for evaluating projects•IRR. Internal rate of return is the discount rate that will give a Net Present Value of 0.•NPV is the Net Present Value of a stream of cash flows discounted at the correct cost of capital for the degree of risk inherent in realising those cash flowsNEXT WEEK !!!
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