Question
List FIVE financial factors to consider when advising on a capital investment.
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Answer
1. Compare payback periods — which is shorter?
2. Compare NPVs — which is positive/higher?
3. Size of initial outlay and how it will be funded
4. Total cash flows after payback (payback ignores these)
5. Life of the asset vs length of payback/NPV period
6. Maintenance and other associated costs over asset life