ABSTRACT
This chapter illustrates the investment decision, basing on the discounted cash-flow analysis and through the computation of various return-on-investment measures. Even as some of the input parameters are secured by firm contracts, the people cannot overlook the fact that investment appraisal and decision making consist of numerous forecasts, estimates and pure guesses about the future states of the world. Alternatively, in research and development intensive and extractive industries such as pharmaceuticals, oil & gas etc., qualitative measures tend to dominate investment decision making. The traditional, rather straightforward and rapid, assessment is the payback method, referring to how quickly the project 'pays back' the initial capital invested. Cash-flows materializing beyond the payback period are ignored, while considering such cash-flows could lead to a different conclusion.
