A Draft Report on Investment Appraisal for Tom Ford Ltd

TABLE OF CONTENTS

1.0 Abstract 3

2.0 Introduction 4

3.0 Discussion 5

3.1 Difference Between the old and new method.

3.2 Findings and Analysis

4.0 Summary and Conclusion 8

5.0 Recommendation 9

5.0 References 10

6.0 Appendix and Workings 11

1.0 Abstract

This report analyses issues related to the investment decision making system for Rivets Ltd and it produces justification for the change and illustrations of project information based on the old and new systems.

In addition, I will be discussing the irrelevant costs that were used in the old system, for example: sunk cost, depreciation, overheads and opportunity cost, and showing that it's a wrong way to do a desi

It explains differences between the new method and the old method of project analysis.

This report also summarizes the advantages and disadvantages of the two systems. I will describe what NPV does and also the differences it has to the old system of analysis. I will show you examples of the implementation of NPV in two project decisions.

Firstly, to the upgrade of the computers would the company purchase a new software or improve the new software.

Secondly, whether to go ahead with the project XZY based on the risk and the profitability of the project or not; Then we will conclude the effectiveness of the NPV method.

2.0 INTRODUCTION

The purpose of this report is to compare and analyse the advantages and disadvantages of the traditional system and the NPV-based system, I want from Rivits Ltd to change their old investment decision making system to one based on NPV. The decision to invest in a new project always has risk of failure involved, history is .marked with many famous business investment project failures such as the Sony Betamax, Coca Cola's ‘New Coke', and Polaroid. To avoid making a bad investment a reliable investment decision making system must be practised. To evaluate the demonstrate the quality of the NPV analysis, in this report we will be looking at two different investments by using the NPV system; two alternatives for upgrading the computer system within the company by either improving the old software or