The study is conducted to know the importance of capital budgeting decision and the techniques to evaluate the investment projects. There are a variety of discounted and non-discounted techniques of capital budgeting.
Discounted techniques considers present value factor, while non-discounted methods do not consider the time value of money.
After analyzing the pros and cons of all the techniques, it is concluded that the best method is net present value method and Internal Rate of return method. Pa back period is also widely used as it is simple and easy to understand and calculate. The literature review and past researches conducted also support this view.
Hence it is highly recommended to use NPV and IRR method in making the capital budgeting decisions. Also for small firms payback period method can be used for evaluation of replacement activity and for small expansion purposes.

Posted Date: 2/6/2012 10:29:08 PM | Location : United States

Ask an Expert

Related Discussions:- Importance of capital budgeting decision, finance, Assignment Help, Ask Question on Importance of capital budgeting decision, finance, Get Answer, Expert's Help, Importance of capital budgeting decision, finance Discussions

Write discussion on Importance of capital budgeting decision, finance
Your posts are moderated

Write your message here..

Related Questions

Highway maintenance, Various types of Bituminous Course? Explain each Various types of Bituminous Course? Explain each

System architecture and design, The home work is to make an model based sys... The home work is to make an model based system architecture for an electrical car. in Enterprise Architecture with SysMl language.

How Does Hydraulic Fracturing For Gas And Oil Recovery Work?, what is the p... what is the possible breakdown of this topic

CHEMICAL ENGINEERING REACTIONS ASSIGNMENT, HI,I GOT ASSIGNMENTS TO TURN IN ... HI,I GOT ASSIGNMENTS TO TURN IN WITHIN 24 HOURS.PLEASE IS THERE ANYWAY YOU COULD HELP OUT?

Production system, Garden Variety Flower Shop uses 750 clay pots a month. ... Garden Variety Flower Shop uses 750 clay pots a month. The pots are purchased at $2 each. Annual carrying costs are estimated to be 25 percent of cost, and ordering costs are $30

Apu starting sequence in aircraft , Apu starting sequence in aircraft : ... Apu starting sequence in aircraft : In figure the APU control unit receives its power from the aircraft battery. By moving the APU switch to ‘ON', power is provided to the i

Interfacing concept, Basic interfacing concept Basic interfacing concept

Matrices for risk analysis, Matrices for risk analysis: NFPA 551 descr... Matrices for risk analysis: NFPA 551 describes a technique of using matrices for risk analysis.  Such matrices are quite commonly used in the UK for assessing risk but, fortun

MICROPROCESSOR, The access time of ROM using bipolar transistors is about The access time of ROM using bipolar transistors is about

Timber, seasoning of timber seasoning of timber