HR Help in Investment Appraisal Technique
Decision Making
Nicol Ltd is considering an investment in a new machine and an analysis of such investment through capital investment techniques such as payback period and NPV has been performed. The calculation of payback period has indicated that the investment in the project will be recovered 3years and 5months approx. The payback period implies the number of years required for recovery of the initial expenditure made in the project and in case of the given project, it is 3years and 5months. In addition to this, NPV is another major indicator of accepting or rejecting the project. If NPV is positive, it implies that it is favorable to accept the project and if it is negative, then it would mean that the project should be rejected. In the given case of Nicol Ltd, the calculation of NPV indicates that it is negative, which suggest that the investment in the new machine should not be made (Shapiro, 2008).
Overall, the investment appraisal techniques indicate that it would not be a wise decision to make investment in the new machine as considered by Nicol Ltd. So, the company should not go for investing in new machine.
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