Task 4 mit
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The document discusses three financial metrics used to evaluate investments: 1) ROI (Return on Investment) measures profit compared to costs and is calculated as (Return - Cost) / Cost. A higher percentage means a better ROI. 2) NPV (Net Present Value) analyzes if an investment will add value by comparing the present value of cash inflows to the initial investment. A positive NPV means the investment should be made. 3) Payback Period is the time needed to recover the initial costs from cash inflows. It is calculated by dividing the initial investment by the annual cash inflows. A shorter payback period is preferable.
Task 4 mit
- 1. Nur Ilyana Bt Ismarau Tajuddin P68499
- 2. ROI (Return of Investment) The money that we invest in the company and its return as profit or… its mean investment gains compare favorably to investment costs. (Return From Investment - Initial Cost of Investment) / Initial Cost of Investment. Example,If company invest rm 100,000 and end up receive of rm 120,000 (20,000 benefit).. The annual ROI will be 20% .
- 3. NVP (Net Present Value) is used to analyze an investment decision and give company management a clear way to tell if the investment will add value to the company. Formula : The present value of an investment expected cash inflows minus the initial investment. If the result show positive value, the investment should be made , otherwise it should not.
- 4. Payback Period The amount of time required to recover the cost of an investment. By other mean, which is the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. Payback Period = Initial Investment / Annual Cash Inflows. Example, a $10000 investment which returned $1000 per year would have a 10 years payback period