How do enterprises in the production sector use the Net Present Value method when conducting project appraisal?

Abstract

For the purpose of gaining an overview of the investment analysis performed in the production sector, we conducted a mixed-methods study in which we analyzed the present value analyses of relevant companies and collected questionnaire responses. The result is a comprehensive analysis in which both direct errors in the company's analysis and several opportunities for improvement regarding the figures used as a foundation are uncovered. Several companies base their analyses on varying values, as demonstrated by the results of the analyses. In addition to examining the companies' routines and practices pertaining to the analyses, we have studied the companies' use of digital tools (such as Excel) in these analyses and identified a number of weaknesses and flaws in the companies' routines. Keywords: Investment Appraisal, Capital Budgeting Techniques, Net Present Value