A very important aspect of financial management is proper decision-making in respect of investment of funds. Successful operation of any business depends upon the investment of resources in such a way as to bring in benefits or best possible returns from any investment.

An appraisal of any investment proposal is necessary to ensure that the investment resources will bring in desired benefits in future. Since resources are limited, a choice has to be made among the various investment proposals by evaluating their comparative merit. It is apparent that some techniques should be followed for making appraisal of investment proposals. This chapter focuses on various appraisal methods.