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

Constraction technology, test for chemical stability of aggregates test for chemical stability of aggregates

The integrator, Integrator This circuit performs the calculus operation... Integrator This circuit performs the calculus operation of integration. An operational amplifier with negative feedback applied via a capacitor (instead of a resistor) will pe

Logic gate - not gate, THE INVERTER ('NOT' GATE) Figure shows the symbo... THE INVERTER ('NOT' GATE) Figure shows the symbol for an inverter, where the output will produce the complement of the input. This device is often employed when the complement

LTE, LTE LTE

Inhibit gate, Inhibit Gate Occasionally it is required to 'hold' one in... Inhibit Gate Occasionally it is required to 'hold' one input to an AND gate at a particular logic level in order to disable the entire gate. One method of representing this sy

Signal conditioning amplifier, Signal conditioning amplifier The primar... Signal conditioning amplifier The primary function of the signal conditioning amplifier is to match the output signal range of the transducer to the input signal range of the a

Cro, derive the expression of deflection of beam in CRO derive the expression of deflection of beam in CRO

Msor, write a note on tracing a closed loop.what are the characteristic,fea... write a note on tracing a closed loop.what are the characteristic,features of a closed loop.

Thermo electric thermometer, how thermoelecteric thermometer is contructed ... how thermoelecteric thermometer is contructed and how it working

Embedded system, I have an assignment of engine control unit (hardware desi... I have an assignment of engine control unit (hardware design and programming) if you have an expert.....