Project appraisal

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1. Cash flows - discounted cash flow analysis.

The evaluation and selection of projects which are most likely to maximise shareholders' wealth, by the comparative analysis of their expected cashflows.

2. Cash flows - discounted cash flow analysis - qualitative & strategic analysis - real options.

Similar evaluation techniques taking account of additional factors and considerations - as well as the expected project cashflows - including for example the existence of real options.

Also known as Project analysis.

Points to note

Note for both definitions above that projects are anything involving expenditures for which the benefits, or some of them, occur at a different time from that of the expenditure or some it.

As well as capital expenditure, included are, for example, acquisitions and disposals, marketing expenditure, advertising, staff training or buying a new coffee pot for a staff refreshment station.

It is only worthwhile devoting time and effort in formal project appraisal for projects involving material amounts of expenditure.

See also

Other resources