5. Finance
Investment Appraisal — Quiz
Test your understanding of investment appraisal with 5 practice questions.
Practice Questions
Question 1
Which of the following investment appraisal methods ignores the time value of money?
Question 2
A project has an initial investment of $$ \$60,000 $ and is expected to generate annual profits of $ \$10,000 $$ for 5 years. What is the Accounting Rate of Return (ARR) for this project?
Question 3
What is a primary limitation of using the Accounting Rate of Return (ARR) method for investment appraisal?
Question 4
A project requires an initial investment of $$ \$30,000 $. It generates cash inflows of $ \$10,000 $ in Year 1, $ \$12,000 $ in Year 2, and $ \$8,000 $$ in Year 3. What is the payback period for this project?
Question 5
Which of the following is a qualitative factor that should be considered in investment appraisal?