CHAPTER TENReturn on Investment

An investment is an exposure of cash that has the objective of producing cash inflows in the future. The worthiness of an investment is measured by how much cash the investment is expected to generate.

The analysis of return on investment is a financial forecasting tool that assists the business manager in evaluating whether a proposed investment opportunity is worthwhile, given the context of the company’s business objectives and financial constraints.

What Is Analyzed?

The investments to be analyzed have some of the following characteristics:

image A major amount of money is involved.

The financial commitment is for ...

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