# Investment Appraisal

> Evaluate capital and strategic investments using NPV, IRR, payback, and strategic fit — with disciplined assumptions and kill criteria. Use when assessing projects, capex, new markets, or major initiatives for go/no-go decisions.

- Skill: `itsual/investment-appraisal` (Agent Skill)
- Install (CLI): `npx skillmds@latest add itsual/investment-appraisal`
- Raw SKILL.md: https://api.skillmd.com/api/skills/itsual/investment-appraisal/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: itsual (https://skillmd.com/u/itsual)
- Updated: 2026-09-21
- Page: https://skillmd.com/skills/itsual/investment-appraisal

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# Investment Appraisal

## Overview

Investment appraisal decides whether committing capital today is justified by future returns and strategic value. It combines quantitative metrics with judgment about risk and alternatives.

## When to Use

- Capex and project approval
- Build vs buy vs partner decisions
- New market or product investments
- Portfolio prioritization of initiatives

## Core Methods

- NPV (net present value)
- IRR / modified IRR
- Payback and discounted payback
- Strategic and option-value considerations
- Sensitivity and scenario analysis

## Principles

- Incremental cash flows only — ignore sunk costs
- Riskier projects need higher hurdles or wider sensitivities
- Strategic fit does not excuse arithmetic fantasy
- Compare against realistic alternatives, including “do nothing”

## Verification

- [ ] Cash flows are incremental and timed correctly
- [ ] Hurdle rate / WACC rationale is stated
- [ ] Sensitivities cover the real uncertainties