Topic: Financial stability as the key driver for investment appraisal 1.

Background of the study Decision making is made by a number of factors, and one of such is investment appraisal. It has been defined by Verbeeten (2006) that investment appraisal is one of the most effective decisionmaking tools to evaluate the soundness of the investment project. Investment appraisal is determined by a variety of elements, from simple one such as payback period, to complicated one such as Net Present Value or Real Options Reasoning. Regardless of the elements at choice, the final contributing factor is the financial stability, which determines the attractiveness of various deciding factors (Sangster, 1993). Investment appraisal is critical in the success and survival of the business because inaccurate appraisal will lead to business failure that, at time, could not be helped. The design of this research is to generate knowledge for the understanding of investment appraisal. In addition to that, this research is also aimed at analyzing the relationship between financial management and the investment appraisal, in order to highlight the importance of financial management in the development of the whole organization. In another aspect, this research also contributes to the extent knowledge of the research in term of evaluating the soundness of an investment project in financial perspective. 2. Research problem In order to effectively achieve the objective of this research, there are a number of research questions that will need to be established, and answered:

What are the methods of investment appraisal that are in accordance with financial perspective?

How would financial constraint affect the process of investment appraisal? What is the relationship between financial management and investment appraisal in the development of the organization?

The main purpose of this research is to identify the relationship between financial management and investment appraisal. In order to achieve this main purpose, this study will first generate the knowledge of financial management and investment appraisal and identify the methods of investment appraisal that is impacted by financial perspective. In addition to that, this research will identify and evaluate the relationship between investment appraisal and financial management. Reference Sangster,A. 1993. Capital investment appraisal techniques: a survey of current usage. Journal of Business Finance and Accounting, 20(3), p.308-323 Verbeeten,F. 1993. Do organizations adopt sophisticated capital budgeting practices to deal with uncertainty in the investment decision? A research note. Management Accounting Research, vol.17, p.107-121