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Inv. appraisal techniques - short answer questions


Question 1

Define the term 'screening test' (or 'criterion level').

Question 2

Explain the term 'time value of money'.

Question 3

Explain what a net present value (NPV) of +$256 at a 20% discount factor tells you about a project.

Question 4

Outline how a residual value affects the average rate of return.

Question 5

Explain the meaning of the payback period for an investment and why this might be considered a measure of risk rather than profitability.