What are the advantages of using these methods

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Question - Capital budgeting methods are used by almost all organizations to help determine their decision in long-term capital projects. According to Schall, Sundem, and Geijsbeek, Jr, a 1978 survey reflected that almost all companies surveyed used one of the capital budgeting methods discussed in Chapter 24 (Payback, Accounting Rate of Return, and NPV; IRR is one also considered in the survey), with 86% of surveyed firms using more than 1 method (see source below).. Today, these methods continue to receive vast usage among organizations even in the midst of more advanced technological methods. A 2005 study by Apap & Masson looked at capital budgeting techniques utilized by publicly-traded utility companies, noting almost 73% of surveyed companies using one or more of the methods discussed (see source below).

Based on your knowledge gained in this unit, please address the following questions:

Why are these methods so widely used?

What are the advantages of using these methods?

Which method do you think is used the most, and why?

What other metrics could you analyze besides cash flows (or financial) when determining whether or not to accept a project?

The post needs to contain relevant terminology and a firm understanding of the capital budgeting methods being discussed in order to achieve the maximum number of points.

Reference no: EM132608538

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