## Accounting Rate of Return (ARR) | Capital Budgeting Techniques

Accounting Rate of Return - Capital Budgeting Techniques Accounting rate of return is the project evaluation technique which differs from other capital budgeting techniques because the focus of this technique is…

## Difference between Annuity Due and Ordinary Annuity

Annuity Due and Ordinary Annuity - Capital Budgeting Techniques We often encounter situations where we have multiple cash flows of same amount. A very common example of such cash flows is…

## How to Calculate NPV | Capital Budgeting Techniques

How to Calculate Net Present Value For example we are planning of starting a business of producing and selling ;We can estimate the initial cost with reasonable accuracy because we know…

## How to Calculate Discounted Payback Period | Capital Budgeting Techniques

How to Calculate Discounted Payback Period For calculating discounted payback period (DPP), we will calculate the present value (PV) of each cash flow (CF) starting from the first year as…

## How to Calculate Payback Period | Capital Budgeting Techniques

How to Calculate Payback Period-Capital Budgeting Techniques Payback period is calculated by capital invested in the project by the net annual cash flow. Average of net annual cash flows may…

## Independent and Mutually Exclusive Projects

Independent and Mutually Exclusive Projects Understanding of classification of capital budgeting projects plays a crucial role while analyzing viability of projects. What is mutually Independent Projects? A Project whose cash flows…

## Internal Rate Of Return And Mutually Exclusive Projects

Internal Rate Of Return And Mutually Exclusive Projects……. What's the Concern? While considering the mutually exclusive projects, IRR technique can be misleading. Investment projects are said to be mutually exclusive…

## Capital Structure and Cash Flows

Capital Structure and Cash Flows On one hand, operations of the company may help in forecasting of future cash flows but in addition to this, future cash inflows and outflows…

## Cash Flow

Cash Flow and Capital Budgeting The success of any business can be determined through its capacity to generate positive cash flows. Therefore, Cash inflow and outflow is considered as one of…

## Profitability Index

Profitability Index Profitability index (PI) is the ratio of investment to pay off a suggested project. It is a useful capital budgeting technique for grading projects because it measures the…

## Present Value of Multiple Cash Flows

Present Value of Multiple Cash Flows We come across many cases where we have to determine the present value of series of multiple cash flows. There are two ways we…

## Discounted Payback Period

Discounted Payback Period One of the limitations in using payback period is that it does not take into account the time value of money. Thus, future cash inflows are not…

## Internal Rate of Return

Internal Rate of Return Internal Rate of Return is another important technique used in Capital Budgeting Analysis to access the viability of an investment proposal. This is considered to be…

## Payback Period

Payback Period Payback period is the first formal and basic capital budgeting technique used to assess the viability of the project. It is defined as the time period required for the…

## Capital Budgeting Process

Capital Budgeting Process Capital Budgeting Process is a process of identifying and evaluating projects where businesses are expected to receive cash flows over a period longer than one year. Any…