CAT / FIA FFM Classroom - Syllabus E3. Capital investment appraisal 4 / 4
a) Calculate the payback and discounted payback of a project and assess its usefulness as a method of investment appraisal.
b) Calculate the accounting rate of return of a project and assess its usefulness as a method of investment appraisal.
c) Discuss the concept of relevant cash flows for decision making.
d) Identify and evaluate relevant cash flows for individual investment decisions.
e) Explain the concept of net present value and how it can be used for project appraisal.
f) Calculate net present value and interpret the results.
(Note: NPV calculations will not include adjustments for inflation, tax or working capital)
g) Outline the concept of internal rate of return and how it can be used for project appraisal.
h) Calculate internal rate of return and interpret the results.
i) Discuss the relative merits of NPV and IRR, including mutually exclusive projects and multiple yields.
j) Explain the superiority of DCF methods over payback and accounting rate of return.