Making Capital Investment Decisions

How many methods of investment can be found in Practice ?

• 3

• 5

• 4

• 6

ARR(Accounting rate of return) is ...

• Sum of discounted values of the cash flow of the investment

• Lenght of time that it takes for the clash flow for the initial investment to be repaid

• Profit from the project expressed as percentage of avg investment

• Maximun periods of acceptable returns of investments

Paybak period (PP) is ...

• Sum of discounted values of the cash flow of the investment

• Lenght of time that it takes for the clash flow for the initial investment to be repaid

• Profit from the project expressed as percentage of avg investment

• Maximun periods of acceptable returns of investments

Net Present value(NPV) is ...

• Sum of discounted values of the cash flow of the investment

• Lenght of time that it takes for the clash flow for the initial investment to be repaid

• Profit from the project expressed as percentage of avg investment

• Maximun periods of acceptable returns of investments

IRR(Internal rate of Return) is ...

• Sum of discounted values of the cash flow of the investment

• Lenght of time that it takes for the clash flow for the initial investment to be repaid

• Profit from the project expressed as percentage of avg investment

• is the discount rate that, when applied to the cash flows of a project, causes it to have a zero NPV