An Investment appraisal is the process by which one can assess whether or not an investment in a project is worthwhile. It is a tool used by both private and public sector organisations
Businesses invest to increase their profits by improving their operations, to match supply to demand, to reduce manufacturing costs and to increase productivity and efficiency.
For “Not for Profit” organisations the incentive to invest is driven by the need to improve the efficiency, effectiveness and economy of the organisation to provide “Value for Money”
It is essential that managers with responsibility for investments have an understanding of the methodologies and theories behind investment appraisal.
Investment Appraisal Methodology
Typical methodologies for investment appraisal include:-
- Pay back period
- Accounting rate of return
- Net Present Value
- Internal Rate of Return (IRR)
- Profitability Index
- Discounted Cash Flow
- Risk Assessment.
PM PROjEN are experienced in carrying out investment appraisals. Using recognised techniques, PM PROjEN will carry out the investment appraisal on your business’s behalf. Where necessary, PM PROjEN will explain the methodology to your key business personnel, ensuring that they are knowledgeable and confident when justifying the proposed investment.