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Chapter
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1
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Introduction
to Investment Appraisal
Who needs to know about return on investment? Uses for the
BoardUses for middle managers. Uses for private investors.
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2
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What
is Investment Appraisal?
Describes
the logical steps involved in evaluating different investment
opportunities. Covers the art of investment appraisal as practiced
by managers predicting the future. Moves into the financial
documentation you need to calculate ROI. |
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3
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Evolution
of Investment AppraisalManagers
have progressed from a simple 'when do I break even?'question,
into more advanced techniques that eliminate the inconsistencies
caused by the timing of project costs and income. Payback
method of RoI and Average return on capital employed. Discounted
cashflows and the internal rate of return. |
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4
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E-Dimension:
Investment Appraisal
When
investors were challenged with valuing companies in the new
Internet environment they chucked out the old rules. How the
market valued Internet companies that had not as yet traded.
How very major telecommunications companies made huge mistakes
in investment appraisal |
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5
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The
Global Dimension
Global
return on investment process needs to bear this in mind if
it is to implement its risk and return strategy. Balancing
central control with empowerment. Looking at a strategy that
gets it right. Learning on a global basis. |
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6
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The
State of the Art
Take
a more holistic view of return on investment by forging a
tight link between projects you intend to subject to financial
evaluation and your strategy. Documenting a business strategyBuilding
a business case template. Using a risk analysis process.
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7
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Investment
Appraisal In Practice
Three
case studies, two of them concerning business decisions and
one concerned with investors calculating return on their portfolios.
Do we start a new service for our customers? Do we stay in
an existing product market? Using the DCF technique to determine
shareholder return. |
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8
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Key
Concepts and Thinkers
The
main part of this chapter describes the key words and concepts
used by the finance department. Words of wisdom on return
on investment from a manager and an investment guru. Glossary
of terms. |
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9
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Resources
References
to sources of material to improve the return on investment
of a private investor. WebsitesBooks and articles.
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10
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Ten
Steps to Making Investment Appraisal Work
Financial
theory is one thing; putting it into practice another. Chapter
10 provides some key insights into using a useful model to
compare one project with another and with a benchmark.
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