Capital Budgeting – Advantages and Disadvantages
Capital budgeting revolves around capital expenditures, including large inflow and outflow of money to finance investment projects. It is a process by which a… Read Article
Techniques of Capital Budgeting
Process of Capital Budgeting
Capital budgeting is perhaps the most important decision for a financial manager. Since it involves buying expensive assets for long-term use, capital budgeting decisions… Read Article
Evaluating New Projects with Weighted Average Cost of Capital (WACC)
The weighted average cost of capital is a weighted average of the cost of equity, debt, and preference shares. And the weights are the percentage… Read Article
Why Net Present Value is the Best Measure for Investment Appraisal?
“Why net present value (NPV) is the best measure for investment appraisal?” This question is as good as another question – “How NPV is… Read Article
Profitability Index (PI) or Benefit-Cost Ratio
Profitability Index (PI) is a capital budgeting technique to evaluate investment projects’ viability or profitability. Discounted cash flow technique is used in arriving at… Read Article
Payback Period (PBP)
The payback period (PBP) is an investment appraisal technique that tells the amount of time taken by the investment to recover the initial investment… Read Article
Modified Internal Rate of Return (MIRR) – The Solution to Multiple IRR
Modified internal rate of return is a solution to the shortcomings of internal rate of return as a project evaluation technique. There are two… Read Article
Advantages and Disadvantages of Internal Rate of Return (IRR)
The advantages and disadvantages of the internal rate of return are important to understand before applying this technique to specific projects. There must be… Read Article
Internal Rate of Return (IRR)
Internal Rate of Return (IRR) is a superior technique for evaluating big projects and investment proposals widely used by management of the company, banks,… Read Article
How is Risk related to Net Present Value?
What is Net Present Value (NPV) and Risk?Net present value (NPV) and the risk have a strong relationship with each other. With an inappropriate… Read Article
Capital Budgeting
What is Capital Budgeting?The term Capital Budgeting is a combination of two words ‘capital’ and ‘budgeting.’ The capital here refers to big expenditures that… Read Article