Week 6 Discussion Board.docx - ? Corporations use several...

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Discuss the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer? Explain why you prefer this method Corporations use several different types of budgeting methods to evaluate the ROI of a capital project. There is profitability index (PI) which calculates the ratio of future cash flow to the initial investment. Internal rate of return (IRR) is the discount rate at which net present value of the project becomes zero. Accounting rate of return (ARR) is the profitability of the project calculated by taking projected total net income and dividing it by the initial investment. Net present value (NPV) is the difference between initial investment and discounted cash flow. But the most used strategy is the payback period is measures the time that an investment will be

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