ABFM: Concepts and Practice · Part B: Advanced Financial Management

Chapter 10: Appraisal methods

Judging a project from its cash flows: payback, ARR, NPV, PI, IRR and MIRR, rationed capital, and social cost-benefit analysis.

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In this chapter

10.1Payback and accounting returnp. 129
10.2NPV and the profitability indexp. 130
10.3IRR and MIRRp. 131
10.4Choosing among projectsp. 132
10.5Social cost-benefit analysisp. 133
Exam traps and quick checksp. 134
Practice: 16 questions in three roundsp. 135
Answers, with every wrong option explainedp. 137
Make it stickp. 139
Chapter 10 on one pagep. 140

Corrections and updates

None for this chapter so far. Every correction to the book, and any rule that changes after its date, is listed on the errata page.