Methods of analyzing investment, Finance Basics

Methods of Analyzing Investment

Capital Budgeting Methods

There are two process of analyzing the viability of such investment as:

a) Traditional process

  1. Payback period process
  2. Accounting rate of return process

b) Modern process or like Discounted cash flow techniques

  1. NPV - Net present value process
  2. IRR - Internal rate of return process
  3. PI - Profitability index process

For the above two (a and b) process to be utilized, they have to meet the following as:

i) They should rank ventures available in the investment market according to their viability that is they should identify such process is more viable than others.

ii) They should rank a venture first whether the venture brings in return earlier and in large lump sums than whether a venture brought in late and less inflows over the same time.

iii) Should rank any type of other projects as and when it is obtainable in the investment market.  That process should take into account such all returns or inflows, must be cash returns as it is essential to be able to finance the cost of the venture.

Posted Date: 1/30/2013 4:55:48 AM | Location : United States







Related Discussions:- Methods of analyzing investment, Assignment Help, Ask Question on Methods of analyzing investment, Get Answer, Expert's Help, Methods of analyzing investment Discussions

Write discussion on Methods of analyzing investment
Your posts are moderated
Related Questions
Lavista Ltd is a leading music entertainment company in the country and the stocks of the company are actively traded in the stock exchange. For the year just ended few days back

Why do some investors prefer high-dividends paying stocks? Why ,ight other investors prefer low-dividend paying stocks?

How often does the "on the run" tsy change?

Management of Account Receivable In order to keep current customers and attract new ones, most firms find it necessary to offer credit. Accounts receivable represents the exte

Importance of Working Capital Management The finance manager must understand the management of working capital since of the following purpose: a) Time devoted to working c

High Potential Venture An organization begins with the intent of growing quickly to annual sales of at least $30 to 50 million in 5 years. It also has the potential to have a f

term paper about financial markets in pakistan

Functions of the Stock Exchange The essential function of a stock exchange is the raising of funds for investment in long-term assets. Whereas this basic function is very sign


What are the tasks of a financial system? Three Tasks of a Financial System are as follows: 1. Decreasing transaction costs 2. Decreasing financial risk 3. Giving liqu