How many methods are there in capital budgeting? what are
those.
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Answer Posted / shoukatali
There are five methods in Capital Budgeting, those are
following
While the NPV is the rule that always maximise share holder
value, some firms use other criteria for their capital
budgeting decisions, such as:
Net present value
Internal rate of returrn
Profitability index
pay back period
Return on book value
in some cases, the investment decisions resulting from the
IRR and profitability index methods agree with those of
NPV. Decision made using the pay back period and return on
book value methods usually are suboptimal from the stand
point of maximising share holder value.
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