Lecture 4 & 5 - investment appraisal

0.0(0)
Studied by 0 people
call kaiCall Kai
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
GameKnowt Play
Card Sorting

1/9

encourage image

There's no tags or description

Looks like no tags are added yet.

Last updated 9:46 PM on 4/22/26
Name
Mastery
Learn
Test
Matching
Spaced
Call with Kai

No analytics yet

Send a link to your students to track their progress

10 Terms

1
New cards

Payback period

The period of time for the inital investment to be recouped.

2
New cards

PBP formula

x + outstanding amount/total reciept

3
New cards

Discounted payback period

Payback period that also accounts for the time value of money.

4
New cards

DPBP formula

Calculate PV then apply PBP formula.

5
New cards

Net present value

The net present value is the value that the investment returns in excess of the required return.

6
New cards

IRR formula

IRR = a + (b-a) (NPVa/NPVa - NPVb)

7
New cards

Profitability index

ΣPV of cash flows/C0

8
New cards

Equivalent annual annuity (EAA)

EAA converts the project’s cashflows into ana nnuity for easy comparison.

9
New cards

EAA formula

NPV/PVAF

10
New cards

Non financial considerations

Environmental, social, ethical, corporate governance, political.