Methods for project appraisal
You'll learn when to use different project appraisal methods based on how a project's business and financial risk compare to the existing company.
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Adjusted present value and risk-adjusted WACC
- 0:22 Methods for project appraisal overview
- 0:29 Business risk versus financial risk
- 1:47 Decision grid for appraisal method selection
- 3:01 When to use weighted average cost of capital
- 3:42 Exceptions allowing existing WACC usage
About this lesson
This lesson walks you through a practical decision grid that shows when to apply the existing weighted average cost of capital, when to use a risk-adjusted WACC, and when adjusted present value becomes essential. Understanding these distinctions is crucial for FM, AFM, and strategic investment decisions in your ACCA or CIMA exams, as examiners test your ability to select the right valuation method for different project scenarios. The lesson covers key risk considerations—whether the project operates in the same business area, how financing changes affect capital structure, and the specific conditions that let you use WACC even when risk factors shift.
Duration: 4m
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the Advanced Financial Management course
All 125 video lessons, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in