Investment Appraisal Questions And Solution Pdf

A selection of questions taken from accn4 on investment appraisal. The methods of investment appraisal are payback accounting rate of return and the discounted cash flow methods of net.

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Organised around the topic of investment appraisal.

Investment appraisal questions and solution pdf. 45 000 80 000 12 6 75 months option 2 2 years and 9 months. 32 000 44 000 12 8 7 months discounted payback 6 option 1 does not provide a discounted payback. These notes are based on the capital investment appraisal questions set in many other exams.

A explain why risk and uncertainty should be considered in the investment appraisal process. Advanced investment appraisal investment appraisal is one of the eight core topics within paper f9 financial management and it is a topic which has been well represented in the f9 exam. Investment problems in many cases allow for a quantitative analysis and modeling approach and the qualitative methods together with quantitative methods are more often used analyzing corporate finance problems.

Assuming conventional cash is positive for a zero discount rate but nothing more definitive can be said. 3 using these cash fl ows undertake an investment appraisal of the two options using. Payback 6 option 1 3 years and 7 months.

The other very important difference is that investment analysis for decision making can be based on the large data sets. Product mix problem 206 investment opportunities and by product constraints 212 example 11 2. Capital rationing problem 212 lp and project choice 214 example 11 3.

Examples of relevant cash flows 3. 5 marks b calculate and comment on the payback period of the project. Review questions 203 11 resource constraints and linear programming 204 study objecti ves 206 lp with two decision variables and three constraints 206 example 11 1.

Question 1 you are an advisor to alpha ltd a long term investor with a need for income over the next 25 years. Items which are not relevant cash flows 4. They are not therefore necessarily comprehensive different topics could be set in the exams.

Both investments will require an upfront payment now at time 0. Academia edu is a platform for academics to share research papers. You are now investigating two potential investments in new instruments underwritten by a well known investment bank which may satisfy the income requirements.

For discount rates greater the npv may be positive zero or negative depending on whether the discount rate is less than equal to or. Meaning of relevant cash flows 2. Umunat plc uses a discount rate of 12 for investment appraisal purposes and expects investment projects to recover their initial investment within two years.

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