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Level 3 Diploma in Business Management

Investment Appraisal Methods

BM305 · Finance in Business — Week 10 of 16

CourseBM305
Week10 of 16
SemesterII
TutorOnline in the course chat

This week’s topics

Investment Appraisal Methods

  1. Purpose of capital expenditure evaluation
  2. Calculating payback period
  3. Calculating accounting rate of return (ARR)
  4. Calculating net present value (NPV) using discount factors
  5. Net Present Value Explained | How to Calculate the NPV Method of Investment Appraisal
  6. Payback Period Explained | How to Calculate the Payback Period Method of Investment Appraisal
  7. Average Rate of Return Explained | How to Calculate the ARR Method of Investment Appraisal

What you will be able to do

  • 3.3 Explain how to undertake investment appraisal.
  • 4.4 Apply investment appraisal methods to alternative capital investment options.

Activity

Start with this week’s 3 videos, then: Seminar, guided reading and a short written task: explain how to undertake investment appraisal.

Study materials

Videos

  • Net Present Value Explained | How to Calculate the NPV Method of Investment Appraisal · YouTube · Two Teachers · 12 min · for registered students
  • Payback Period Explained | How to Calculate the Payback Period Method of Investment Appraisal · YouTube · Two Teachers · 10 min · for registered students
  • Average Rate of Return Explained | How to Calculate the ARR Method of Investment Appraisal · YouTube · Two Teachers · 9 min · for registered students

Further resources

  • Principles of Accounting, Volume 2: Managerial Accounting, ch. 11: Capital Budgeting Decisions · PDF · OpenStax, textbook chapter; pp. 517–564 · for registered students
  • Managerial Accounting, ch. 8: How Is Capital Budgeting Used to Make Decisions? · PDF · Saylor Academy, textbook chapter; pp. 472–540 · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
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Admitted students ask questions on this week’s page in the student portal: an AI assistant trained on the course answers first, and during the course’s timetabled classes Connect to your tutor brings your tutor into the chat, who may start a call if needed.

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Course plan
  • Week 1: Introduction to Business Records and Accounting
  • Week 2: Business Finance and Financial Statements
  • Week 3: The Double Entry Accounting System
  • Week 4: Bank Reconciliation
  • Week 5: Control Accounts and Correction of Errors
  • Week 6: Absorption and Marginal Costing
  • Week 7: Budgeting Framework and Subsidiary Budgets
  • Midterm: Midterm evaluation
  • Week 9: Budgetary Control and Variance Analysis
  • Week 10: Investment Appraisal Methods
  • Week 11: Appraisal Application and Project Evaluation
  • Week 12: Applying Finance in Business in practice: case studies
  • Week 13: Assignment workshop: research, planning and referencing
  • Week 14: Assignment workshop: drafting, feedback and improvement
  • Week 15: Review and coursework completion
  • Final: Final assessment and submission
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