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How many methods are there in capital budgeting? what are
those.
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Answer / venky
capital budgeting id process of invoving the long term
investment projects , it involves the management decision
so that the mgt analyse the methods of capital budgeting.
the five types of methods here;
they con diveded in to two catagerys
1 , traditional method: ARR, PBP
2 , discounting method: NPV,PI,IRR
| Is This Answer Correct ? | 27 Yes | 0 No |
Answer / prasanna11149@yahoo.co.in
Capital budgeting (or investment appraisal) is the planning
process used to determine whether firm's long term
investments such as new machinery, replacement machinery,
new plants, new products, and research and development
projects are worth pursuing.
Many formal methods are used in capital budgeting,
including the techniques such as
Net present value
Profitability index
Internal rate of return
Modified Internal Rate of Return, and
Equivalent annuity.
These methods use the incremental cash flows from each
potential investment, or project. Techniques based on
accounting earnings and accounting rules are sometimes
used - though economists consider this to be improper -
such as the accounting rate of return, and "return on
investment." Simplified and hybrid methods are used as
well, such as payback period and discounted payback period
| Is This Answer Correct ? | 29 Yes | 4 No |
Answer / sangita
capital budgeting is a method of investment decision in
capita expenditures. the expenditures ,of which benefit
is to be recieved for more than one period.
the methods are;
pay backperiod method
internal rate of method,
net present value method,
profitability index metod
rate of return method
| Is This Answer Correct ? | 24 Yes | 2 No |
Answer / 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.
| Is This Answer Correct ? | 17 Yes | 1 No |
Answer / aashi
Capital budgeting is the process of managing the long-term capital of a firm in the most profitable way.
There are a number of techniques of capital budgeting. Some of the methods are based on the concept of incremental cash flows from the projects or potential investments. There are some other techniques of capital budgeting that are based on the accounting rules and accounting earnings. The hybrid and simplified techniques of capital budgeting are also used in practice.
Many formal methods are used in capital budgeting, including the techniques such as
 Accounting rate of return
 Net present value
 Profitability index
 Internal rate of return
 Modified internal rate of return
 Equivalent annuity
| Is This Answer Correct ? | 6 Yes | 0 No |
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