Mastery in investment appraisal techniques

person icon Selvaratnam Ajendra

Mastery in investment appraisal techniques

PB period, ARR, NPV, IRR, annuity & perpetuity, non-annual receipts, PI & non-financial factors in capital budgeting

updated on icon Updated on Sep, 2023

language icon Language - English

person icon Selvaratnam Ajendra

architecture icon Finance & Accounting,Investing & Trading,Business Budgeting


30-days Money-Back Guarantee

Training 5 or more people ?

Get your team access to 19,000+ top Tutorialspoint courses anytime, anywhere.

Course Description

You will learn everything you need to know in investment appraisal fundamentals. As an investor, your perspectives on investment alternatives will radically change after completing this course. You will be able to choose the best projects for your precious funds. As a student, you will get to know all the basic investment appraisal techniques which could appear in your exams. I can assure you that this course will give you the maximum return for your investment on this programme by making you the master in investment appraisal techniques.

At the completion of this course, you will be a master in following investment appraisal techniques.

  1. Traditional Payback Period

  2. Accounting Rate of Return / Average Rate of Return (ARR)

  3. Net Present Value (NPV)

  4. Internal Rate of Return (IRR)

  5. Discounted Payback Period

In addition to these techniques, you will learn how to incorporate the following aspects in investment appraisals.

  1. Annuity and Perpetuity

  2. Non-annual cashflows

  3. Capital rationing and Profitability Index (PI)

  4. Non-financial factors

Designed to make you an expert

You will get concept explanation animation videos, theory explanation handouts, question sets, answer keys and answer explanation videos for each topic. There are more than 70 practice questions with answer explanation. All the theory explanation handouts, question sets and answer keys have been given in a downloadable format to make sure you get maximum out of it.

If you want to be a master in investment appraisal techniques, you should follow the following steps.

Step 01: Watch the concept explanation video

Step 02: Read the theory explanation handout

Step 03: Try the relevant question set

Step 04: If you feel comfortable with the questions, check your answers with the recommended answers. If not, go back and watch the video again.

Step 05: Watch the answer explanation video to consolidate your knowledge (answer explanation videos have been given for the selected challenging questions only)

Bonus step: Watch the videos explaining the application of Excel formulae to calculate NPV and IRR.

What you will get in each section

Section 01: Introduction to the course

  • The structure of the course is explained with few ground rules to follow.

Section 02: Introduction to investment appraisal

  • Importance of investment appraisal

  • Classification of investment appraisal techniques

Section 03: Payback period

  • Importance of the traditional payback period

  • How to calculate the payback period

  • How to calculate the payback period when you have many investments in different years

  • Pros and cons of payback period method

Section 04: Average Rate of Return / Accounting Rate of Return (ARR)

  • Key equations to calculate the ARR
    How to calculate ARR

  • Pros and cons of the ARR technique

Section 05: Time value of money

  • Why money has a time value

  • The logic behind calculating the present value from the future value

  • The meaning of cost of capital / discount rate

  • How to tackle the deferred and advanced cashflows

Section 06: Net Present Value (NPV)

  • How to calculate NPV using the formula

  • How to calculate NPV using the present value table

  • Pros and cons of NPV method

Section 07: Annuity and Perpetuity

  • The concept of annuity

  • How to use annuity techniques in NPV calculation

  • Annuity techniques for the advanced and deferred cashflows

  • Annuity techniques for the constant cashflows in the middle of a project

  • How to use perpetuity in NPV calculation

  • Perpetuity techniques for advanced and deferred cashflows

Section 08: NPV with non-annual cashflows

  • How to convert the annual cost of capital to a non-annual period

  • How to incorporate monthly, quarterly and bi-annum cashflows in NPV calculations

  • How to apply annuity techniques for non-annual cashflows

Section 09: A comprehensive NPV calculation

  • An NPV calculation with non-annual cashflows, annuity techniques and irrelevant cost

Section 10: Internal Rate of Return (IRR)

  • Simplified explanation on the concept of IRR

  • How to calculate IRR

  • Pros and cons of the IRR technique

Section 11: Discounted Payback Period

  • How to calculate discounted payback period

Section 12: Capital Rationing and Profitability Index (PI)

  • The concept of capital rationing and the underlying assumptions

  • Calculating the PI and ranking the projects according to the PI

  • How to allocated the limited funds among different projects

Section 13: Calculating NPV and IRR using the Excel formulae

  • How to calculate NPV using the inbuilt Excel formula

  • How to calculate IRR using the inbuilt Excel formula

Section 14: Non-financial factors in investment appraisal

  • The non-financial factors which could affect our investment decisions

  • The importance of considering the non-financial factors when making investment decisions

Who this course is for:

  • Students who follow professional courses such as CIMA, ACCA or AAT.
  • Undergraduates or postgraduates who need to learn investment appraisal techniques.
  • Professionals from non-financial backgrounds
  • Novice investors


What will you learn in this course:

  • Students will learn widely used and accepted investment appraisal techniques and how and when to use them.

  • Students will learn to apply payback period, ARR, NPV, IRR and discounted payback methods and the strengths and weaknesses of those methods.

  • Students will learn annuity and perpetuity techniques, non-annual cashflow adjustments, capital rationing and profitability index (PI) and importance of non-financial factors in investment appraisals.

  • Students will learn how to do investment 


What are the prerequisites for this course?

  • No prior knowledge required. All the concepts will be explained from the elementary level.

Mastery in investment appraisal techniques


Check out the detailed breakdown of what’s inside the course

Introduction to the course
1 Lectures
  • play icon Course introduction video 03:06 03:06
Introduction to investment appraisal techniques
3 Lectures
Payback Period Method
6 Lectures
Average Rate of Return (ARR)
5 Lectures
Time Value of Money
3 Lectures
Net Present Value (NPV)
7 Lectures
Annuity and Perpetuity
6 Lectures
NPV with non-annual cashflows
4 Lectures
A comprehensive NPV calculation with annuity and non-annual cashflows
2 Lectures
Internal Rate of Return (IRR)
4 Lectures
Discounted Payback Period Method
4 Lectures
Capital Rationing and Profitability Index (PI)
3 Lectures
Calculating NPV and IRR using Excel formulae
3 Lectures
Non-financial factors in investment appraisal
2 Lectures

Instructor Details

Selvaratnam Ajendra

Selvaratnam Ajendra

Mr. Ajendra is a Senior Lecturer at a reputed private university. As an Associate Member of CIMA and a Senior Member of AAT, he has nearly 10 years of experience in coaching students for various professional and academic programmes. As a MBA holder along with a Bachelour's degree in Computation and Management, he has taught for the students at different levels ranging from undergraduate level to master's level.

Course Certificate

User your certification to make a career change or to advance in your current career. Salaries are among the highest in the world.

sample Tutorialspoint certificate

Our students work
with the Best

Related Video Courses

View More

Annual Membership

Become a valued member of Tutorials Point and enjoy unlimited access to our vast library of top-rated Video Courses

Subscribe now
People having fun around a laptop

Online Certifications

Master prominent technologies at full length and become a valued certified professional.

Explore Now
People having fun around a laptop

Talk to us