Project Appraisal is Not an Exact Science. Critically Discuss Various Essay

Project Appraisal is Not an Exact Science. Critically Discuss Various Project Appraisal Techniques - Essay Example klist Model 7 Multi weighted scoring Models 8 Limitation of Multi weighted scoring Models 9 Conclusion 9 References 11 Introduction Project assessment is the combination of both the project evaluation and appraisal. Project appraisal concerns itself with advance assessment to determine whether the project is worth the investment channeled to it (Siriwardena 2011, p.205). After a company has carried out cost benefit analysis of a project, then it is in a position to decide on whether the project is to be implemented or rejected. Researchers have not yet identified the best techniques for project worth estimation. However, project appraisal techniques can help in deciding whether to accept or reject a project. The techniques can be broadly classified into three. The categories are such as, discounted, non-discounted and non-financial techniques. ... Over decades, NPV criticism has been based on its failure in considering the option of the managerial team of abandoning or extending a project. Thus, the NPV technique undermines the cash flow of a project true NPV (Pinches 1994, Van horne 1995). Through investment and financial interaction, decisions have been made by various expertises and NPV method has been adjusted. In that case, the new NPV equals to the NPV sum to equity and financial impacts present value (Myers 1974, Luehrman 1997). The major reason why net present value (NPV) and internal rate of return (IRR) provides recommendations that are conflicting is as a result of inherent reinvestment hypothesis based on NPV and IRR (Solomon 1956, Rensaw 1957). On the contrary, it is argued that, in IRR or NPV methodology, there exists no reinvestment rate implicit assumption (Dudley 1972, Biedleman 1984). Nevertheless, the authors write that, it is significant to come up with reinvestment rate explicit assumption when choosing be tween two or more competing projects. In recent years, a net present value generalized formula has been developed (Beaves 1998, 2003). The new formula accounts explicitly for projects reinvestment cash flows. In addition to that, rate of return is overall considered. However, the new formula is based on the assumption that, cash flows (net) experienced after null time get financed positively by inflows of cash flows (net). The inflow should occur subsequently to cash outflows time zero but before cash outflow next period. In summary, total initial outlay of a project largely depends on outlay net cash expected regardless the financing source. Net present value is considered more superior than internal rate of return (IRR). NPV utilizes reinvestment rate

Smith and Marx in Economics Essay Example | Topics and Well Written Essays - 1250 words - 1

Smith and Marx in Economics - Essay Example In his economic theory he focused largely on issues relating to labour and power, while Smith focused on capital and freedom. A significant number of people think that Adam Smith invented economics when he published The Wealth of Nations in 1776. In it, Smith wrote about how wealth is generated from both labour and land, and how this generation of wealth can lead to higher living standards and productivity. Accumulated wealth is capital that can be reinvested and yielf further dividends. The accumulation of wealth was a good thing; it was especially encouraged in systems that permitted free trade. Free trade permitted goods and services to be exchanged without tariffs. The main advantage of this was that it allowed people who had different items at their disposal to obtain things they needed. He wrote about the market’s â€Å"invisible hand.† This is an illustration that suggests that the market knows best, as it is the accumulation of peoples' desires. It is most famou sly summed up by Smith as follows: â€Å"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages† (26-7). ... [T]his produce †¦ bears a greater or smaller proportion to the number of those who are to consume it †¦ .[B]ut this proportion must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgement with which its labor is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed (Smith, 10). His insight into 18th century economics was remarkable at the time. But hindsight makes Smith's contribution especially impressive as it resulted in political freedom and a remarkable generation of wealth. This was in direct contrast to the work of Marx, which led to misery and death. Smith's work was picked up great economists such as Frederick Hayek and Milton Freedman to argue for freer markets and more private ownership. Today the Wealth of Nations is considered a foundational text and Smith, who was cited frequently in his own day, is considere d one of the greatest economists (Campbell, et al, 7). Throughout the 19th century a number of economists took up Smith's work and added to it; but the greatest economist of that century was surely the German Karl Marx. His influence on world history was tremendous. His work was very different than Smith's. He focused on the unfairness inherent in the capitalistic system and felt that only labour was valuable. He felt that workers were being oppressed by employers and that they should rise up and form a new ruling class. Revolutionaries around the world took up his ideas in the 20th century to disastrous effect.