Features of an ideal investment appraisal method
– Should consider time value of money
– Should utilize cash flows in project appraisal
– Should give absolute decision criterion whether to accept or reject a project
– Should rank independent projects in order of their economic viability
– Should distinguish between acceptable and unacceptable projects if they are mutually exclusive.
Several methods exist for evaluating investment projects under capital budgeting. Identify and explain three features of an ideal investment appraisal method.
