Investment appraisal is a set of techniques that businesses use to decide whether a particular investment is going to be worthwhile financially, or to choose between different investment opportunities. The word ‘investment’ is usually associated with the purchase of fixed assets, for example new machinery or vehicles, but it can also refer to the purchase of stocks and shares, other businesses, new premises or an investment in a marketing campaign.
There are three main methods of investment appraisal:
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