Before a business makes a commitment to a new investment, the main consideration is the financial return the new investment will provide. This unit looks at the different investment appraisal tools managers can use, such as payback period, average rate of return (ARR), and the importance of cash flow. Qualitative aspects will also be investigated such as the time value of money.

Higher level students will also consider the value of discounted cash flow and net present value (NPV) as appraisal techniques.