Interest may be defined as the charge for using the borrowed money. It is an expense for the person who borrows money and income for the person who lends ……

# Capital budgeting techniques

The value of money changes over time. The value of a dollar in hand today is more than the value of a dollar to be received a year from now because if ……

Annuity means a stream or series of equal payments. For example, you have made an investment that will generate an interest income of $5,000 for you at ……

Net present value method (also known as discounted cash flow method) is a popular capital budgeting technique that takes into account the time value of ……

Like net present value method, internal rate of return (IRR) method also takes into account the time value of money. It analyzes an investment project ……

Unlike net present value method and internal rate of return method, payback method does not consider the present value of cash flows. Under this method, ……

If you have already studied other capital budgeting methods (net present value method, internal rate of return method and payback method), you may have ……

The income tax usually have a significant effect on the cash flow of a company and should be taken into account while making capital budgeting decisions. ……

Due to limited funds, companies cannot always invest in all projects that look profitable. They try to make the best possible use of funds available for ……

Present value of $1 table is used to find the present value of a single cash flow (payment or receipt) that is expected to occur in future. ……

Present value of an annuity of $1 table is used to find the present value of a series or stream of equal cash flows beginning at the end of the current ……