Investment Appraisal (Edexcel A-Level Business): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What does investment refer to in business?
What does investment refer to in business?
Spending money to generate future returns
What does the payback period measure?
What does the payback period measure?
How long to recover the initial cost
What formula calculates partial year payback in months?
What formula calculates partial year payback in months?
(Amount required / Cash flow) × 12
Why is payback useful when technology changes rapidly?
Why is payback useful when technology changes rapidly?
Recovering costs quickly reduces risk
What is the ARR formula?
What is the ARR formula?
(Net profit per annum / Capital cost) × 100
When comparing projects using ARR, which should be selected?
When comparing projects using ARR, which should be selected?
The one with the highest ARR
Why is money today worth more than the same amount in the future?
Why is money today worth more than the same amount in the future?
It can earn interest over time
What does discounted cash flow account for?
What does discounted cash flow account for?
Effect of interest rates only
What is a key limitation of the payback method?
What is a key limitation of the payback method?
It ignores cash flows after payback
Which qualitative factor involves employee morale and redundancies?
Which qualitative factor involves employee morale and redundancies?
Human relations impact