Investment appraisal is the process of evaluating the potential profitability and risks of an investment project. It helps businesses and investors make informed decisions by analyzing various financial metrics, such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. These metrics assess whether the expected returns justify the initial investment and ongoing costs. The appraisal process typically involves comparing different investment options to determine which one offers the best financial outcome. By considering factors like cash flow projections, market conditions, and project duration, stakeholders can prioritize investments that align with their strategic goals and risk tolerance.