In this week,we had went through an an exercise to calculate the capital investment appraisal given by Mr. Sam Moorwood by 4 methods which are payback period, net present value (NPV), average annual percentage rate of return (ARR) and internal rate of return (IRR).
figure 1: cash flow
Figure 1 is the sample of the cash flow for project comparison. We had been discussed all the project's capital investment appraisal during the seminar.
I can now consider the viability of such development by using components of residual valuation. I would like to tend to favour the project which had higher IRR, with shortest payback period as client first consider. It is very important that Client know when the invested development will starting making profit and rate of return of the development.
I can now consider the viability of such development by using components of residual valuation. I would like to tend to favour the project which had higher IRR, with shortest payback period as client first consider. It is very important that Client know when the invested development will starting making profit and rate of return of the development.
I also learn that cost and values is definitely related to the site and location factors, market conditions and also policy directions and all these would help a lot in monitoring the project in a long run basis.
To ensure the client is undertaking a profitable project, I would like to pay more attention on valuation aptitude act as a professional quantity surveyor.
I have applied these methods into my assessment to determine the viability of Matilda site for budget hotel. Although I still unable to produce a detail calculation for investment appraisal but I can perform better in the future through this lesson.
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