Investment proposalSpecific Instructions:Please see attached business case to prepare investment appraisalBusiness Case template You are allowed to make reasonable assumptions in order to complete the
Investment proposal
Specific Instructions:Please see attached business case to prepare investment appraisalBusiness Case template You are allowed to make reasonable assumptions in order to complete the assessment and these must be included in the Assumptions section of the Business Case template.
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Order Paper NowInvestment Appraisal(Investment in a capital project can only be justified if the additional benefits exceed the costs of the investment. Investment appraisal can be conducted with reference to the impact of a new project/solution on reported profits or on cash flows. Please note that any costs already incurred (sunk costs) should be ignored when completing the appraisal. The idea is to focus on justifying additional spend as there is nothing that can be done about the money already spent. There are various methods used to complete a financial appraisal. The main ones are as follows:Benefit/Cost Ratio: Here you take the total benefits and total costs and show these as a ratio. >1 indicates a positive ratio. The period over which benefits are calculated must be specified and consistent e.g. 1 year, 3 years. For example, if total costs are €100k and total benefits are €125k, then the Benefit Cost Ratio is 1.25.Accounting Rate of Return: This is normally calculated as the average annual profit you expect over the life of an investment project, compared to the average amount of capital invested. For example, if a project requires an average investment of €100k and is expected to generate an average annual profit of €15k, then the ARR would be 15%. Payback Period: This is a technique for calculating the period of time required for a project investment to break even i.e. at what point will the investment start paying for itself. For example, if a project requiring an investment of €100k is expected to provide annual cash flow of €25k, the payback period would be 4 years. Discounting Future Cash flow and Sensitivity Analysis not required for assignment. The benefits figures should be taken from the Benefits (See Section 5 of the business case) and the costs from the Estimated Costs & Timescales Section (Section 8 of the business case).
The cost benefit should be presented in the following Table.) Please fill the solution on section 9 in the business case.
AppraisalProposed Solution
Total Costs
Total Benefits
Benefits Cost ratio
ARR (%)
Payback Period
Investment proposalSpecific Instructions:Please see attached business case to prepare investment appraisalBusiness Case template You are allowed to make reasonable assumptions in order to complete the was first posted on September 17, 2020 at 1:06 pm.
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