Can some one kindly explain (with appropriate example if possible) the following. The definition in course notes is not clear to me what is Annual Capital Charge? Share holder Value Approach? Thanks for your help. Animesh
The annual capital charge spreads a lump sum investment over a chosen number of years eg a £10m investment may be spread over 5 years resulting in an annual capital charge of £2m. It is similar in concept to depreciation. The shareholder value approach attempts to assess the impact of a project on the value of the company as a whole from the point of view of shareholders.
