INVESTMENT APPRAISAL METHODS

ADAMA SCIENCE AND TECHNOLOGY UNIVERSITY SCHOOL
OF CIVIL ENGINEERING AND ARCHITECTURE
DEPARTMENT OF CIVIL ENGINEERING
Course Title: ENGINEERING ECONOMICS
Program: 5th year Civil Eng.
A/Y & Sem.: 2020/21, Second Sem.

,ASTU Engineering Economics Compiled By: Nati



CHAPTER FOUR

4. INVESTMENT
APPRAISAL METHODS
Instructor: Natnael Fantu



July, 2021

,ASTU Engineering Economics Compiled By: Nati

 4.1 INTRODUCTION
 Investment Appraisal Methods
 Based on cash flow equivalence, the following are the
basic methods for IAM.
 Equivalent Present Worth
 Equivalent Future Worth
 Equivalent Annual Worth
 Cash Flows System
1. When source is Bank 2. When source is Company
Loan Investment
Bank ---------→ Customer , Company --------→ Project
Repayment Return

, ASTU Engineering Economics Compiled By: Nati

 Investment Types:
1. Independent Investment:
This means that a decision on one investment does not
affect the other.
2. Mutual Exclusive Investment:
In this case acceptance of one automatically eliminates
the others.
 Project Balance:
Suppose you have taken a loan and repay it at i %. one
needs to know the outstanding balance remaining at any
time t.