P2 overview - capital investment decision making

In this lesson

1. 0:00 Capital investment decision making overview
2. 0:38 Data for decision making framework
3. 2:16 Creation and decision phases explained
4. 3:51 Project appraisal techniques introduction
5. 5:00 Payback period and accounting rate of return
6. 5:33 Net present value and internal rate of return
7. 6:48 Modified internal rate of return and real options
8. 9:00 Equivalent annual cost and capital rationing
9. 10:18 Pricing strategies and cost-based pricing
10. 11:01 Market penetration and price skimming strategies
11. 12:27 Optimal pricing and profit maximisation approach

About this lesson

You'll learn how businesses evaluate long-term investment projects by combining financial analysis with qualitative factors, then master the key appraisal techniques including payback period, accounting rate of return, net present value, and internal rate of return. The module breaks into four core areas. First, data for decision making covers the creation and decision phases of investment projects, balancing stakeholder impact and risk assessment alongside financial viability. Second, project appraisal teaches you to compare investment options using different methodologies, each with distinct strengths and limitations. Third, further aspects of project appraisal introduces advanced techniques like modified internal rate of return, real options, equivalent annual cost, and capital rationing—tools for handling complex real-world scenarios. Finally, pricing strategy rounds out the syllabus, from cost-based approaches and market penetration strategies through to optimal pricing using algebraic methods. You'll develop both calculation skills and conceptual knowledge, learning when and why to apply each technique. The good news: complex calculations come with formula sheets and discount tables, so you can focus on understanding the methodology and recognising which approach fits each scenario.

Duration: 14m