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The reasons behind investment appraisal, and the rationale for a post-installation audit

In many companys, there are investment appraisal procedures, such as investment proposal forms (showing the projected return on investment among other things) and post-installation audit (appraisal of investment after it's been undertaken) forms.

What is the rationale behind these sorts of procedures? How do they help companys realise their objectives?

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1. Whether the companies or its managers can increase the efficiency and reduce their costs with respect to the investment.
2. The procedures outline the external restraints within which the companies must work for the improving the return on investment.
3. When considering investments there may be several equally attractive options but the appraisal procedures help decide which is the best possible option with regards to the company's policies.
4. These proposals help the proper screening of investment proposals that take place, including the methods of proposal evaluation.
5. The common methods required by the forms ...

Solution Summary

The solution presents a list of six points demonstrating information and procedures which should be accomplished before investments are made. For the evaluation process, there are four paragraphs of information to explain the rationale.