Welcome to the world of investments! Making wise choices in business can make the difference between success and failure, and today we will explore three key ways of making sure those choices are winners!

This is like a detective, helping businesses figure out if an investment is worth it or not. It's the process of crunching numbers to see if a business proposal will be profitable. It also helps businesses compare different investment projects, like choosing between opening a new store or buying a new machine.

Real-world example: Imagine you're deciding between buying an espresso machine or a drip coffee machine for your coffee shop. You'd use investment appraisal to see which one would make more money over time.

This method is all about speed! It's like a race to see how long it will take for a business to earn back the money it initially invested. We look at the net cash flows (money coming in and going out) to calculate the payback period. It's great for fast-changing industries where time is of the essence, but it has a downside: it only looks at cash earned up to the payback period and doesn't consider overall profitability.

Real-world example: Imagine you buy a popcorn machine for your movie theater. You calculate that it will take 6 months to earn back the cost of the machine through popcorn sales. This is your payback period.