Abstract
After studying this chapter, you should be able to: explain the opportunity cost of an investment; distinguish between compounding and discounting; explain the concept of net present value (NPV) and internal rate of return (IRR); calculate NPV, IRR, payback period and accounting rate of return; justify the superiority of NPV over the IRR; explain the limitations of payback and the accounting rate of return methods; describe the effect of performance measurement on capital investment decisions. discuss the factors to be considered when evaluating investments in advanced manufacturing technologies.
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