Everything you need to know about capital budgeting methods. Some of the capital budgeting methods are:- 1.Traditional Methods 2.Modern Methods 1. Traditional methods includes: a.Payback Period Method (PBP) and Its Variants - Post back period, Post payback profitability method, Discounted payback period b.Accounting Rate of Return Method (ARR) 2. Modern methods includes: a.Net Present Value (NPV) b.Profitability Index (PI) or [...]
Capital rationing refers to a condition where a firm is not in a position to invest in all profitable projects due to the constraints on accessibility of funds. It is a known fact that the financial resources are always inadequate and the demand for them far exceeds their availability. It is for this reason that the firm cannot take up [...]
Everything you need to know about the process of capital budgeting. Capital budgeting is a process by which companies assess how to fund operations and new ventures through movement and management of assets. This involves a series of actions or steps taken to achieve best possible returns. This process involves the selection of those new investment proposals presented to a [...]