Several methods exist for evaluating investment projects under capital budgeting. Identify and explain three features of an ideal investment appraisal method.

CPA-Financial-Management-Section-3 Revision kit

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.

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