3.8.1—Investment appraisal methods Topic Practice
3.8.1—Investment appraisal methods Topic Practice
Students practise calculating payback period and average rate of return (ARR) for competing projects using case-study revenue, cost and time data.
How this is tested
- calculate payback period by identifying when cumulative net cash flow recovers capital cost
- calculate ARR using net profit over project life divided by initial capital cost, then interpret relative