Capital Budgeting – When we study about Financial Management, we often consider taking decisions regarding investing in which project out of the various available options. To make this decision easier & more meaningful, we may adopt a variety of techniques. These techniques are called – The Capital Budgeting Techniques. Let us have a look on … Read more
Internal Rate of Return (IRR) is that rate of return at which the present value of cash inflows is equal to the present value of cash outflows. Thus, it is that rate at which the NPV of the project will be o & the profitability index will be 1. Internal Rate of Return Before undertaking … Read more
Net Present Value (NPV): Present value of cash flows minus initial investments, The Net Present Value (NPV) method as an investment appraisal or capital budgeting technique shows how an investment project affects company shareholders’ wealth in present value terms. Maximizing shareholders’ wealth is an important goal for management, and investment projects with positive NPV are … Read more