Choosing between investments

The exam question this section is really for

Both 91379 and 91381 set the same task: two options, some numbers, choose one and justify it. The 2025 91381 paper gave two injection-moulding machines with different purchase prices, training costs, energy use and output rates.
The numbers never decide it on their own, and the schedules say so — they accept either choice "if suitably justified". The marks are for the reasoning, not the answer.

When the methods disagree

Use this to work out what a disagreement is telling you:

Situation	What it means	Who should care
Short payback, low NPV	Money back quickly but little total value	A business short of cash, or in a fast-changing market
Long payback, high NPV	Slow to return, but creates the most value	A business with reserves and a long horizon
High ARR, long payback	Profitable overall, but the returns are late	A business that can wait
Positive NPV, payback beyond the machine's life	The forecast depends on the final years	Nobody — treat the forecast with suspicion

The honest answer to "which method should we use?" is all three, for different reasons — and then a judgement about which risk the business can least afford.

Qualitative factors — the things the numbers miss

The teaching guide is explicit that qualitative factors matter in investment decisions. These are the reasons a business buys the option with the worse numbers:
Reliability and support. A machine with a local service agent and 24-hour parts is worth more than a cheaper one serviced from overseas — downtime costs more than the price difference.
Environmental impact. Energy use, emissions and waste. This is both a cost and increasingly a market-access requirement, and it is where kaitiakitanga and sustainability arguments belong.
Staff. Will the new equipment need skills the workforce does not have? Will it eliminate jobs, and what will that do to morale and industrial relations?
Quality. A machine producing a more consistent result protects the brand, even if it returns less cash.
Capacity for growth. Buying more capacity than is needed now costs money now and avoids buying again in three years.
Flexibility. Equipment locked to one product is a risk if the product's market moves.
Customer and stakeholder expectations. Overseas buyers increasingly audit how their suppliers produce, not just what they deliver.
Compliance. Some options meet a standard the business will need soon anyway.
Risk of obsolescence. Technology that will be superseded shortens the real life of the investment, whatever the appraisal assumed.

How to write the recommendation

Use this shape and the evaluation looks after itself:
- State the decision in the first line. "The business should purchase Machine A."
- Concede the other option's strongest point, with its number. "Machine B costs $13,000 less and saves a further $9,000 in training."
- Give the reason your option wins, tied to what this business is trying to achieve. "But the business's stated goal is to reduce its environmental impact to meet buyer expectations, and Machine A uses a third of the electricity."
- Add new information. A long-term effect, a capacity point, a sustainability point, a risk not yet mentioned.
- Say what would change your mind. "If the business's constraint were cash rather than emissions, Machine B would be the better choice." This is the mark of a genuinely evaluated answer.

The exam question this section is really for

Both 91379 and 91381 set the same task: two options, some numbers, choose one and justify it. The 2025 91381 paper gave two injection-moulding machines with different purchase prices, training costs, energy use and output rates.

The numbers never decide it on their own, and the schedules say so — they accept either choice "if suitably justified". The marks are for the reasoning, not the answer.

When the methods disagree

Use this to work out what a disagreement is telling you:

Situation

What it means

Who should care

Short payback, low NPV

Money back quickly but little total value

A business short of cash, or in a fast-changing market

Long payback, high NPV

Slow to return, but creates the most value

A business with reserves and a long horizon

High ARR, long payback

Profitable overall, but the returns are late

A business that can wait

Positive NPV, payback beyond the machine's life

The forecast depends on the final years

Nobody — treat the forecast with suspicion

The honest answer to "which method should we use?" is all three, for different reasons — and then a judgement about which risk the business can least afford.

Qualitative factors — the things the numbers miss

The teaching guide is explicit that qualitative factors matter in investment decisions. These are the reasons a business buys the option with the worse numbers:

Reliability and support. A machine with a local service agent and 24-hour parts is worth more than a cheaper one serviced from overseas — downtime costs more than the price difference.

Environmental impact. Energy use, emissions and waste. This is both a cost and increasingly a market-access requirement, and it is where kaitiakitanga and sustainability arguments belong.

Staff. Will the new equipment need skills the workforce does not have? Will it eliminate jobs, and what will that do to morale and industrial relations?

Quality. A machine producing a more consistent result protects the brand, even if it returns less cash.

Capacity for growth. Buying more capacity than is needed now costs money now and avoids buying again in three years.

Flexibility. Equipment locked to one product is a risk if the product's market moves.

Customer and stakeholder expectations. Overseas buyers increasingly audit how their suppliers produce, not just what they deliver.

Compliance. Some options meet a standard the business will need soon anyway.

Risk of obsolescence. Technology that will be superseded shortens the real life of the investment, whatever the appraisal assumed.

How to write the recommendation

Use this shape and the evaluation looks after itself:

State the decision in the first line. "The business should purchase Machine A."
Concede the other option's strongest point, with its number. "Machine B costs $13,000 less and saves a further $9,000 in training."
Give the reason your option wins, tied to what this business is trying to achieve. "But the business's stated goal is to reduce its environmental impact to meet buyer expectations, and Machine A uses a third of the electricity."
Add new information. A long-term effect, a capacity point, a sustainability point, a risk not yet mentioned.
Say what would change your mind. "If the business's constraint were cash rather than emissions, Machine B would be the better choice." This is the mark of a genuinely evaluated answer.