Financial Performance And Management : Assessing The Value Of Investment

1164 Words Jan 6th, 2015 5 Pages
Financial Performance and Management Assessing the value of investment is a vital consideration any organization needs to undertake before embarking on an investment or a strategic plan. Most organizations fail due to failure in follow through and research of proposed strategies. Some of the strategies developed by organizations are utterly dysfunctional, while others are very efficient but the implementation lets the strategies down. Investment analysis is the systematic process of assessing the functionality and performance or organizational investments. Arguably, one of the key strategies employed in investment analysis is the use of multiple techniques to assess the performance of any given investment. For this project, an investment analysis of Anthony’s Orchard will be conducted, focusing on four main approaches to evaluate the value of their investment, which involves the purchase of an apple-pressing machine. The four methods used are Accounting Rate of Return, Payback Period, Net Present Value, and the Internal Rate of Return. The proposed investment will cost the organization $950,000. The machine is very expensive to begin with. Arguably, the market research indicates that the machine would lead to much profit for the organization. The estimated net income per year from the machine is expected to be $95,000 per year, with annual cash flows of over $90,000. The machine is expected to have a life span of seven years with no salvage…
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