A new pragmatic approach to capital investment appraisal: The financial appraisal profile model

Evidence is produced to support the claim that management have not fully accepted the advice of academics in the use of sophisticated capital investment appraisal methods, with managers continuing to use the non-discounted cash flow methods alongside the internal rate of return and net present value. The concern that some managers may even abandon formal financial and project risk assessment altogether has led to the development of a new ‘profile’ approach. The financial appraisal profile model is described in detail and illustrated through the use of an illustrative case study.