A2 - Business - Making investment decisions - Flashcards in A Level and IB Business Studies

Investment appraisal

The process of analysing the financial merits of a possible future investment.

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Payback

Calculation of how long it will take to recoup the cost of an initial investment.

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Average rate of return (AVR)

Average annual profit expressed as a percentage of initial investment

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Net present value (NPV)

The total net return of an investment stated in today's monetary value

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Discount factor

The rate by which future cash flows are reduced (discounted) to reflect current interest rates.

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Time value of money

Recognition of the fact that £1 in the future due to a fall in its purchasing power.

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Investment criteria

A pre-determined target against which to judge an investment.

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Other cards in this set

Calculation of how long it will take to recoup the cost of an initial investment.

Payback

Average annual profit expressed as a percentage of initial investment

The total net return of an investment stated in today's monetary value

The rate by which future cash flows are reduced (discounted) to reflect current interest rates.

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