Unit-5 Capital budgeting
Formulas
Note For PBP,NPV,PI,IRR, Cash flows are considered after tax but before depreciation. For ARR, Ca...
Meaning of capital budgeting
Capital budgeting, also known as investment appraisal, is the process that a business undertakes ...
Importance
The concept of the time value of money (TVM) is central to finance, economics, and investment the...
capital budgeting process
Capital budgeting is a crucial financial management process that companies undertake to evaluate ...
Modern methods
Project appraisal is the process of assessing the viability and potential return on investment of...
Payback period
Formula: [ \text{Payback Period} = \text{Years before final year} + \left( \frac{\text{Investment...
Accounting rate of return
Formula Average Rate of Return Method [\text{Average Rate of Return} = \frac{\text{Average Annua...
NPV method
Note: This section provides a conceptual overview of NPV. It is recommended to practice solving N...
Profitability index
Note: This section provides a conceptual overview of PI. It is recommended to practice solving P...
IRR methods
Note: This section provides a conceptual overview of IRR. It is recommended to practice solving ...
Decision Rules
Decision Rules Technique Accepting Criteria for Single or Independent Project(s) Accepting Cri...