Payback period, average rate of return (ARR), and net present value (NPV) using discounted cash flow.
Investment appraisal compares the cost of a project with the future cash flows it generates, to decide whether it is worthwhile. Three methods are examined.
Payback period
The time taken for the net cash inflows to repay the initial cost. Quick and useful for cash-flow/liquidity, but ignores total profit and the time value of money.
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