Introduction to Investment Appraisal

The video introduces investment appraisals, emphasizing the need for businesses to make informed investment decisions to maintain competitiveness and align with strategic goals. It discusses the challenges of investing in technology, the risks and uncertainties involved, and the importance of financial resources. The video explains investment appraisal techniques like payback period, average rate of return, and net present value, highlighting their advantages and disadvantages.

Why do businesses need to continually make investment decisions?

• To maintain a sustainable performance over time

• To reduce their workforce

• To increase their debt

• To avoid technological advancements

What is one of the biggest challenges for smaller companies when investing in projects?

• Finding skilled workers

• Locating suitable office space

• Securing financial capital

• Reducing production costs

What is a potential risk when investing in new technology?

• Technology becoming outdated quickly

• Immediate increase in profits

• Reduction in employee skills

• Decrease in market share

What is a key consideration when integrating new technology into a business?

• Decrease in customer satisfaction

• Reduction in product quality

• Employee training and adaptation

• Immediate cost savings

What is the purpose of an investment appraisal?

• To reduce the number of employees

• To assess long-term benefits of investment projects

• To increase the company's debt

• To avoid market research

Which investment appraisal method considers both profitability and timing of cash flows?

• Cost-benefit analysis

• Average rate of return

• Payback period

• Net present value

What is a disadvantage of the payback period method?

• It is too complex

• It does not consider profitability

• It requires extensive data

• It is time-consuming