Abstract
This chapter discusses capital investment appraisal as a means to determine whether new investments will be worthwhile and whether they will generate more cash than they originally cost. It starts by defining capital investment and explains why businesses undertake capital investment appraisal when making long-term investment decisions. The chapter then introduces the four main capital investment appraisal techniques and their application to capital investment decisions. It explores the advantages and limitations of each of the four main capital investment appraisal techniques. The chapter explains the concept of the time value of money.
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