What factors would influence a firm's choice of investment appraisal other than profitability?
Question:
Answer:
The whole point of doing an investment appraisal is to find out what return you would get on the investment, and how long it would take to make a profit.
All other factors would depend entirely on the product/service being appraised and what problems or pitfalls were likely to occur.
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Depends on a number of things, how cash rich the firm is, the owner/s feelings towards risk, how quickly they want to see a return on the investment, how much it is going to cost before they see ANY return etc, etc.
There are so many ways to carry out an investment appraisal, but if you are studying IA, manufacturing gives the best examples as there is an actual physical product and you can better measure your results.
As always in business, cashflow is king!
cash return, internal rate of return, cost of finance and opportunity cost
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