Which of the following is not a type of Investment Appraisal?

The concept of Investment Appraisal is crucial in assessing and evaluating potential investments to guide decision-making. The correct answer identifies "Cumulative Cash Flow" as not being a distinct type of Investment Appraisal methodology.

Investment appraisal techniques primarily focus on quantifying the financial viability and estimating the potential returns of a project or investment over time. Established methodologies include:

• Payback: This method assesses how quickly the initial investment can be recovered through cash inflows. It's straightforward and focuses primarily on liquidity.

• Discounted Cash Flow (DCF): This approach calculates the present value of future cash flows generated by an investment, accounting for the time value of money. It helps in understanding the real profitability of an investment.

• Internal Rate of Return (IRR): This technique estimates the profitability of potential investments by calculating the discount rate at which the net present value (NPV) of cash inflows equals the initial investment. A higher IRR suggests a more attractive investment opportunity.

Cumulative Cash Flow, while useful for tracking the total cash generated over time, does not fit into the defined methodologies of Investment Appraisal. It merely aggregates cash flow figures rather than providing a framework to assess profitability or return on investment.

This understanding of the distinct investment appraisal methods highlights the