Investment appraisal - introduction

In this lesson

1. 0:00 Introduction to investment appraisal techniques
2. 0:08 Understanding cash flows and project timelines
3. 0:49 Making financial viability decisions
4. 1:18 Real-world investment example: excavator purchase
5. 2:07 Four key appraisal methods explained
6. 2:40 NPV and IRR: most commonly used techniques

About this lesson

Investment appraisal helps you answer critical questions: should we proceed with a project, or if we're choosing between options, which one creates the most value? You'll explore the four key techniques you need for your exam—payback period, discounted payback period, net present value (NPV), and Internal Rate of Return (IRR)—and understand when each is used. The lesson uses a practical example of a construction company evaluating whether to buy new equipment, showing how cash outflows today must be weighed against uncertain future inflows to make sound investment decisions. By the end, you'll see why NPV and IRR are the most rigorous methods used in real-world finance, and why mastering these techniques is essential for FM, AFM, and strategic decision-making across your qualification.

Duration: 3m