2 pages/≈550 words
Business & Marketing
FM Unit VIII Paper: Capital Budgeting Techniques (Research Paper Sample)
Using the CSU Online Library and the unit reading assignment, explore the capital budgeting techniques covered in the unit, NPV, PI, IRR, and Payback. Compare and contrast each of the techniques with an emphasis on comparative strengths and weaknesses. Be sure to show you understand how each is applied and used in capital budgeting decisions. Use Microsoft Word to complete your answer. Your paper on comparing techniques should be between two to three pages. Course Textbook Lasher, W. R. (2011). Practical financial management (6th ed.). Mason, OH: South-Western.  Chapter 10: Capital Budgeting source..
Capital Budgeting Techniques
CAPITAL BUDGETING TECHNIQUES
Capital budgeting is the process of planning which is used to determine the investments that are worth pursuing within an organization. Capital budgeting is also known as investment appraisal employs a procedure that conclude whether long term investments of a certain organization, expenditure or major capital are worth to pursue (Lasher, 2011). Various techniques are applicable in capital budgeting even though each of them contains comparable strengths and weaknesses to the other, according to their operations.
Various formal methods are usable in capital budgeting and the techniques suitable for this function include the Net profit value, the profitability index, international rate return, as well as payback period. The long-term investment assessed by these techniques may include replacement machinery, new machinery, new products, new plants, and projects of research development. The Net present value abbreviated as NPV, is usable in estimating the value of potential project through valuation of discounted cash flow. This kind of valuation needs estimating the timing and size of t...
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