In five pages IRR and NPV calculations are examined in this overview of the importance of investment appraisals to ensure success. Two sources are listed in the bibliography.
Name of Research Paper File: TS14_TEquest5.rtf
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at the case study the "Ships for All Seasons" has three choices. These are all different, requiring different investment levels, cash flows and giving different returns over different periods. Therefore,
the three different choices need to be examined so that the best choice is made. The first aspect is the use of the critical success criteria. This means that
the factors that are required for the project to be successful need to be identified. These may be in terms of factors such as the pay back period or the
break even point. In a small business where the proprietor is living on savings this may be a critical factor. The need is to identify any factor that MUST be
present for the project to succeed. It is also worth noting that these may also include factors that are not financial, such as skills and market conditions. Once these are
identified they may be applied to the case study. For example, if there is a requirement for the payback period to be under 5.3 years then the only project that
will meet this criteria is the Drake. If the project all meet the critical success factors then the next stage is to determine which is the best. The figures appear
to indicate that all projects will give a return on the money, therefore, the business owner is likely to want to know which will give the best return for the
money available. It is likely that the business owner will have a finite amount of resources. This means that the cost of making one investment may be seen as
an opportunity cost as they cannot then invest in an alternate investment. For example, the cost of Investing in Drake may be that Cook cannot go ahead. The problem is