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Average Rate of Return
The Average Rate of Return (ARR) measures the profitability of an investment as a percentage of the initial or average investment cost. It helps businesses compare the potential returns of different investment projects.
Discount Rate
The discount rate is the interest rate used to discount future cash flows to their present value. It reflects the opportunity cost of capital.
Investment Appraisal
Investment appraisal is the process of evaluating the potential profitability and risks of an investment to determine its financial viability.
Net Present Value
NPV is a financial metric used to evaluate the profitability of an investment or project. It calculates the difference between the present value of cash inflows and the present value of cash outflows over a given period.
Payback Period
The payback period is the amount of time it takes for an investment to generate enough cash flows to recover the initial investment cost.
Time Value of Money
The Time Value of Money is the concept that a sum of money has greater value now than the same sum in the future due to its potential earning capacity.