ABSTRACT
This chapter reviews the methods of investment appraisal developed by economists and others. It examines the evidence that is available on the relative importance of these methods in practice. The chapter describes that assessment is made of the relative strengths and weaknesses of the different appraisal techniques. It details that examination of the difficulties encountered, under conditions of uncertainty, in investment appraisal. The chapter analyses that sources of business finance used by UK industry, with some international comparisons. It examines that special problems faced by small firms in raising capital and the behaviour of very large firms in the capital market. The chapter examines the level of aggregate investment in the United Kingdom, the debate over its determinants and the implications for government policy to be drawn. It considers the involvement of central government in investment decision making.
