Guide

Investment appraisal techniques

Introduction

Investment is a key part of building your business. New assets such as machinery can boost productivity, cut costs and give you a competitive edge. Investments in product development, research and development, expertise and new markets can open up exciting growth opportunities.

At the same time, you need to avoid overstretching limited financial resources or restricting your ability to pursue other options. Deciding where to focus your investment is an essential part of making the most of your potential.

Even a project that is not designed to generate a profit should be subjected to investment appraisal to identify the best way to achieve its aims.

This guide highlights the key financial and non-financial factors you should take into account when considering an investment. It also introduces the main financial appraisal techniques you can use.