Archive | Analysis

The following points highlight the top four methods of evaluating and ranking profitability of investment projects. The methods are: 1. Pay Back Period (PBP) Method 2. Average Annual Rate of Return (AARR) 3. Net Present Value (NPV) 4. Internal Rate of Return (ARR). Method # 1. Payback Period Method (PBP): The payback period method is concerned with the recoupment (return) [...]

The following points highlight the four popular techniques for measuring risk and uncertainty in different projects. The techniques are: 1. Risk Adjusted Discount Rate Method 2. The Certainty Equivalent Method 3. Sensitivity Analysis 4. Probability Method. Technique # 1. Risk Adjusted Discount Rate Method: This method calls for adjusting the discount rate to reflect the degree of the risk and [...]